In the wake of the interest rate cut by the Reserve Bank of New Zealand, the NZD/USD sank to lows of nearly 0.56750, but then a reversal higher was produced with sustained higher ground.
The NZD/USD is trading around 0.57250 as of this writing. This is above levels the currency pair traversed most of the time on Tuesday. This morning’s rate cut by the Reserve Bank of New Zealand of 0.50 basis points was anticipated, upon this news the NZD/USD sank to lows of nearly 0.56750 but then a reversal higher started.
Traders should look at the price of the NZD/USD as they read to compare short-term fluctuations. Price velocity is likely to continue into the day, but the ability to climb above yesterday’s hours long value realms is intriguing and not surprising. Financial institutions knew the RBNZ would cut interest rates today, but it was their monetary policy stance afterwards which helped clarity and causes some buying of the NZD/USD.
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Cautious Approach with Hints of Aggressiveness in New Zealand
The Reserve Bank of New Zealand essentially has outlined that two more rate cuts of 0.25 will be done in the next two central bank meetings, if economic conditions trend per their forecasts. The notion that additional cuts will be seen has helped solidify the attitudes of financial houses. The ability of the NZD/USD to climb above the 0.57200 ratio and sustain trading in the last hour is technically intriguing.
If the NZD/USD remains within sight of the 0.57300 ratio it would open the door to potential targets last seen before the Christmas holiday got underway. The NZD/USD moving above 0.57300 and sustaining this point in the short and near-term could be a solid signal for bullish traders, but they should not get too ambitious. Notions of higher values are certainly logical but risk management and conservative approaches will be needed.
Behavioral Sentiment and Near-Term Speculation
Because clarity has been reaffirmed by the Reserve Bank of New Zealand this will help financial institutions. The NZD/USD remains in the lower part of its long-term price range and while it may be natural to believe a correction higher is going to take place, sustained incremental climbs have proven difficult for short-term traders.
- Volatility and reversals will remain a feature for NZD/USD traders in the near-term as resistance levels will certainly spark momentary choppiness as day traders dream of higher values.
- The NZD/USD should be pursued carefully, bullish traders should look for sustained price levels to be achieved and then use risk taking tactics to help guide their decisions.
- The 0.57300 ratio today could prove to be a lynchpin, traders looking for higher levels around 0.57400 to 0.57500 should remain cautious.
NZD/USD Short Term Outlook:
Current Resistance: 0.57300
Current Support: 0.57200
High Target: 0.57390
Low Target: 0.57010
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