NZD/USD: the Fed and the RBNZ to grant action around the pair
|- Following Fed's decision late Wednesday, the RBNZ will present its own monetary policy stance.
- US central bank will likely overshadow its Asian counterpart.
The Reserve Bank of New Zealand is having its monetary policy meeting this Wednesday, right after US Federal Reserve announces its own stance on the matter, granting action around the NZD/USD by the end of the day. The RBNZ is widely expected to keep its cash rate unchanged at a record low of 1.75%.
The RBNZ is in no rush to raise rates according to the February statement but today's meeting will be the last one lead by Governor Grant Spencer, as Adrian Orr will become the new governor effective on March 27th.
In the meantime, Governor Spencer said last Tuesday that the bank plans to review its macro-prudential policy with the Treasury, in order to achieve "greater transparency and understanding" in governing. The move could lead to easing restrictions on home loans, after five years of macro-prudential policy to counter a hot housing market. Beyond that, the central bank is expected to bring little new to the table, and the pair's direction will mostly depend on Fed's decision.
If the US Central Bank actually pulls the trigger and the dot-plot anticipates four possible hikes for this year, then the dollar's strength will overshadow any announcement from the RBNZ.
NZD/USD technical outlook
The NZD/USD pair is in a clear bearish trend according to the daily chart, undermined by Aussie's weakness, this last a consequence of Trump-triggered trade war, which dented demand for commodity-linked currency. The pair is trading at its lowest in over two months and at a key inflection point, as the price is hovering around its 100 and 200 DMAs. This last has offered a major bouncing point ever since mid-December, now standing at 0.7157. Technical indicators in the mentioned chart present clear bearish slopes below their mid-lines skewing the risk toward the downside, although, with both central banks in the way, anything could happen.
Below 0.7120, the pair has scope to accelerate its decline during the following sessions, with next supports coming at 0.7060, and the 0.7000 figure. The immediate resistance is the 0.7190 region, where the pair topped this Wednesday and also have a relevant low from earlier in the month. Beyond it, 0.7240 is a probable bullish target.
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