- NZD/USD is currently trading in a narrow start of the week range of between 10 pips with a high of 0.6634 and a low of 0.6623.
- NZD/USD has been in a correction from 0.6544 and ws able to score a high on Friday of 0.6639 on dollar weakness.
The Reserve Bank is reluctant to hike
“The Reserve Bank is reluctant to hike; they made that abundantly clear in the recent Monetary Policy Statement. And we see growth averaging 2 ½% over the next couple of years; hardly a stall, but considerably softer than the Reserve Bank’s expectation. That combination is not consistent with forecasting rate hikes. We are now forecasting that the OCR will be flat for the foreseeable future. Of course it is not that we literally believe the OCR will never be moved ever again; rather, we no longer believe on balance that the next move will necessarily be upwards. Indeed, given how long it is until a hike could plausibly be on the cards, the balance of risks is, if anything, tilted towards the next move being a cut. But the economy is muddling through for now. We still expect core inflation to rise further in the near term, reflecting previous strength in the economy. But beyond that, the resilience of underlying inflation does not look assured.”
NZD/USD levels
Support 0.6510 Resistance 0.6670
Support is seen at 0.6510 while resistance is located at 0.6670. There is an argument for the upside while indicators have resurfaced from out of oversold territory and bulls can target resistance at 0.6670. 0.6860 comes next ahead of 0.6920 as the June high can be had. The 200-month moving average resistance is at 0.7020. However, on the downside, 0.6510/50 guards a run to the 0.6470s and below there, 0.6240 remains as a big level that protecting the double bottom lows at 0.5910 (2004 and 2006 levels).