The New Zealand dollar got two major blows this evening: A big rate cut and a bad Trade Balance. Looking at forex charts, NZD/USD is on the edge of major support line. Breaking it could show the way for deep plunge.
First, RBNZ cut the interest rate by 1.5%! This dramatic cut was more than 1% that was expected. The new Official Cash Rate is now at 3.5%. RBNZ stated that interest rates could go even lower in New Zealand.
The second blow for the kiwi was the Trade Balance. Early expectations stood at a negative balance of 100 million. But the actual figure was -347M. Also here, it was much worse than expected.
When doing a technical analysis of NZD/USD, we can easily see the support line:
0.5150 is a line that NZD/USD has had a hard time to cross. Also after these shakes, NZD/USD has managed to stay above it.
But how long will it last? With a bad economic outlook and and expectations of more rate cuts, NZD/USD will probably tumble. If this support is breached, it will go down a lot.
The next major economic indicator for the New Zealand dollar is the monthly Building Consents due on Thursday, at 21:45. If it also disappoints, we might see a breach.Get the 5 most predictable currency pairs