The NZDUSD has been trending lower over the last 7 days of trading. That has helped to push the price down from a high of 0.6378 to a low of 0.6106 today. That is 272 pips in 7 trading days, which is a pretty good move.
Today there is some up and down stall. Why?
- The RBNZ will meet and announce its interest rate decision tomorrow in NZ (at 9 PM ET). The expectation is for a 50 basis point cut after a 25 basis point cut at the last meeting. Lower inflation is the catalyst. The stall here can be traders awaiting the the decision and the comments from the central bank on rates going forward.
- The other stall reason is that the price has moved back to test the 50% midpoint of the move up from the August low at 0.6113. That midpoint level is also between key daily moving averages. The 100-day moving average is at 0.61218. The 200-day moving average is at 0.60974. As a result, traders can use the area as a low-risk defining level for dip buyers. It is a neutrral area with buyers and sellers waiting for the shove from the decision.
Technically, if the price were to move below the 200-day moving average I would expect further momentum toward the 61.8% retracement at 0.60509.
Conversely, on the top side, a rotation higher would have traders looking toward a swing area between 0.6167 and 0.6179. That is also where the broken 38.2% retracement level is found at 0.61757. If the price does move higher and the RBNZ is not overly hawkish for some reason, I would expect sellers to lean in that area. Watch that area on a rebound for a selling opportunity with a stop on a break above.
This article was written by Greg Michalowski at www.forexlive.com.
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