July 10, 2024 at 09:17AM
In case you missed the decision earlier: RBNZ leaves it cash rate on hold at 5.50%, as expected
The pressure is staying on the New Zealand dollar today, as it is holding at the lows for the day currently. NZD/USD is down 0.8% to near 0.6070 and is testing key support levels once more.
The confluence of the 100 (red line) and 200-day (blue line) moving averages at 0.6067-71 is in focus now. That has been a key region in holding the pair from falling further at the end of June and the start of July.
With the RBNZ now teeing up rate cuts in their upcoming final three meetings this year, the kiwi might find it hard to get off the floor now. That especially as other major central banks are not sending out a message that is as dovish.
The RBA might even have to pivot to rate hikes while the Fed is maintaining the narrative that there is no need to rush to rate cuts just yet. On the latter, they are still hoping for inflation to come down further and are not going to act unless the economy starts to signal a recession.
So, the kiwi is facing strong headwinds in two key currency pairs in AUD/NZD and NZD/USD. That until the big picture narrative changes course again. While NZD/USD is threatening a further technical breakdown above, AUD/NZD is already breaking out to its highest since October 2022.
This article was written by Justin Low at www.forexlive.com.
