- NZD/USD is back to weekly highs at 0.6518, although the RBNZ raised rates on Wednesday.
- The Fed minutes confirmed that all participants were in agreement on increases of 50 basis points for the June and July meetings.
- NZD/USD Price Prediction: A “bearish harami” in the daily chart is looming, once confirmed, could open the way for a retest of the 20-DMA at 0.6385.
NZD/USD encounters resistance and fails to extend Wednesday’s gains after the Reserve Bank of New Zealand (RBNZ) raised rates by 0.50%, lifting overnight cash rates ( OCR) at 2%. At 0.6460, NZD/USD is recovering from weekly highs above 0.6500, despite bullish market sentiment.
Global equities are up, reflecting positive market sentiment. In the FX complex, the mood is mixed as winners fluctuate between safe-haven peers and risk-sensitive currencies. The New Zealand Dollar is the weakest currency at the start of the North American session, with no fundamental reason for this decision.
Meanwhile, the US Dollar Index, a gauge of the greenback’s value against a basket of peers, is losing ground and back below 102.000, down 0.12% to 101.956. Meanwhile, US Treasury yields, led by the benchmark 10-year note, were flat at 2.754%, reflecting market participants backtracking with an aggressive Fed, as readings Preliminary first-quarter U.S. GDP data for 2022 showed a contraction of 1.5% per year.
Additionally, the US Department of Labor reported that initial jobless claims for the week ending May 20 fell to 210,000 from 215,000 expectations.
On Wednesday, the U.S. Federal Reserve’s Open Market Committee released the minutes of the May meeting, which delivered some already known news, while confirming policymakers’ position to hike rates by 50 basis points. at each of its meetings in June and July. Furthermore, the Fed agreed that it needed to move “quickly” to a neutral stance and that a “restrictive” approach was appropriate. Also added that some members pointed out that they were and will be focused on inflationary pressures and noted that prices are biased upwards.
For the rest of the week, the New Zealand record would feature ANZ Roy Morgan Consumer Confidence for May, forecast at 83. On the US front, Personal Consumption Expenditure (PCE) is widely expected as it is the the Federal Reserve’s favorite inflation indicator. .
NZD/USD Price Prediction: Technical Outlook
The NZD/USD daily chart shows the pair remaining lower, despite NZD/USD buyers lifting the major above the 20-day moving average (DMA) on May 23, a signal that consolidated the pair. However, failure to trade above 0.6568 would not shift the bias towards neutral on the downside and may even expose NZD/USD to additional selling pressure as it forms a “bearish-harami” pattern. “.
If the latter scenario plays out, the first NZD/USD support would be the May 25th low at 0.6417. A break below would expose the May 19 cycle low at 0.6290, followed by the year-to-date low at 0.6145. Otherwise, if the NZD/USD bulls push the exchange rate above 0.6568, it would open the door for further gains, although the major would face some supply areas. The first resistance for NZD/USD would be the 50-DMA at 0.6647. Once cleared, the immediate supply level would be the 100-DMA at 0.6688, followed by the April 20 high at 0.6813.