- NZD/USD stages a technical correction following last week’s fall.
- US Dollar Index remains on track to close the day in the positive territory.
- RBNZ will announce its policy rate decision on Wednesday.
The NZD/USD pair ticked down at the start of the week and touched its lowest level since September 2015 at 0.6252 but staged a decisive recovery. As of writing, the pair was trading at 0.6291, adding 0.56% on a daily basis.
The fact that there weren’t any macroeconomic data releases from New Zealand or any major developments surrounding the US-China trade conflict suggests that the pair’s price action today was an overdue technical correction following last week’s three-day drop that caused the pair to erase more than 100 pips.
Attention shifts to RBNZ
Later this week, the Reserve Bank of New Zealand (RBNZ) will announce its interest rate decision and will release the monetary policy statement.
Previewing the RBNX meeting, “We expect the RBNZ will leave the OCR on hold at 1.00% next Wednesday, but leave the door open to further cuts,” said analysts at Australia and New Zealand Banking Group (ANZ).
“The Bank will most likely want to let the dust settle a little following August’s surprise 50bp move, but with this pre-emptive Committee nothing is certain. We continue to forecast three more 25bp cuts (in November, February and May).”
On the other hand, the Greenback seems to be attracting investors on Monday as a better alternative to major European currencies that came under pressure on disappointing macroeconomic data releases from the euro area and limiting the pair’s upside for the time being. The US Dollar Index was last up 0.2% on the day at 98.65. The upbeat Manufacturing and Services PMI reading from the US also provided support to the USD.
Technical levels to watch for
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