NZD/USD consolidates RBNZ-inspires gains to multi-month tops, above 0.7300 mark

NZD/USD witnessed aggressive short-covering move in reaction to RBNZ’s hawkish surprise.
The RBNZ indicated that it could gradually hike interest rates from the third quarter of 2022.
A modest uptick in the US bond yields extended some support to the USD and capped gains.

Haresh Menghani FXStreet

The NZD/USD pair now seems to have entered a bullish consolidation phase and was seen oscillating in a range near three-month tops, just above the 0.7300 mark.

The pair built on this week's gains and caught some aggressive bids – marking the third consecutive day of a positive move – after the Reserve Bank of New Zealand (RBNZ) announced its policy decision. As was anticipated, the RBNZ left its cash rate at a record low level of 0.25% and maintained a 100 billion New Zealand dollars limit for its program of government bond purchases.

The hawkish surprise, however, came from the accompanying rate statement, wherein the central bank outlined that it could gradually hike interest rates from the third quarter of 2022. The RBNZ also acknowledged the recent notable improvement in the economic outlook amid gradual progress in COVID-19 vaccinations and indicated that economic uncertainty is diminishing.

The explicit cash rate forecast prompted some aggressive short-covering move around the domestic currency and pushed the NZD/USD pair above the 0.7300 mark, to the highest level since February 26. The strong move up was further supported by a subdued US dollar price action and the prevalent risk-on environment, which tends to benefit the perceived riskier kiwi.

The USD Index languished near multi-month lows amid expectations that the Fed will retain its ultra-lose monetary policy stance for a longer period. Various FOMC officials eased worries about runaway inflation and reiterated that any spike in prices is more likely to be temporary, forcing investors to scale down their bets for an earlier than anticipated Fed lift-off.

Meanwhile, a modest uptick in the US Treasury bond yields held traders from placing fresh bearish bets around the greenback. This, in turn, was seen as a key factor that kept a lid on any further gains for the NZD/USD pair, at least for the time being. That said, the lack of any meaningful pullback suggests that the path of least resistance for the pair is to the upside.

Technical levels to watch

NZD/USD

Overview
Today last price	0.7308
Today Daily Change	0.0080
Today Daily Change %	1.11
Today daily open	0.7228

Trends
Daily SMA20	0.7215
Daily SMA50	0.7142
Daily SMA100	0.7179
Daily SMA200	0.6993

Levels
Previous Daily High	0.7251
Previous Daily Low	0.7204
Previous Weekly High	0.7272
Previous Weekly Low	0.7151
Previous Monthly High	0.7287
Previous Monthly Low	0.6945
Daily Fibonacci 38.2%	0.7233
Daily Fibonacci 61.8%	0.7222
Daily Pivot Point S1	0.7204
Daily Pivot Point S2	0.7181
Daily Pivot Point S3	0.7157
Daily Pivot Point R1	0.7251
Daily Pivot Point R2	0.7275
Daily Pivot Point R3	0.7298

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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