NZD/USD consolidates RBNZ-inspired gains below 0.7400
- NZD/USD rose to its highest level since April 2018 on Wednesday.
- RBNZ left its policy rate unchanged at 0.25% as expected.
- US Dollar Index moves sideways above 90.00 ahead of Powell's testimony.
The NZD/USD pair jumped to its highest level since April 2018 at 0.7393 on Wednesday and seems to have gone into a consolidation phase ahead of the American session. As of writing, the pair was up 0.55% on the day at 0.7380.
RBNZ's upbeat outlook lifts NZD
As expected, the Reserve Bank of New Zealand left its policy rate unchanged at 0.25% following its policy meeting. Although the policy statement showed that the RBNZ is ready to lower the policy rate if needed, the upbeat economic outlook helped kiwi gather strength.
Commenting on the policy statement, "the RBNZ now views risks to the economic outlook as ‘balanced’ rather than ‘less skewed to the downside’," noted economists at MUFG Bank. "The RBNZ still sees one more quarter of GDP contraction in Q1 before the economy recovers more sustainably. The GDP forecast for this year was lifted to 4.0% up from 3.6%.”
Meanwhile, the greenback struggles to build on Tuesday's recovery gains as investors await FOMC Chairman Jerome Powell to testify before the House Financial Services Committee. At the moment, the US Dollar Index (DXY) is virtually unchanged on the day at 90.15.
Additionally, New Home Sales data will be featured in the US economic docket. In the early trading hours of the Asian session on Thursday, the ANZ Business Confidence and Activity Outlook data from New Zealand will be looked upon for fresh impetus.
Technical levels to watch for
Author
Eren Sengezer
FXStreet
As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.
