FxWirePro: NZD/USD edges lower, RBNZ stays pat with a dovish forward guidance

NZD/USD chart - Trading View 

NZD/USD has paused upside and was trading 0.34% lower on the day at 0.6470 at around 04:28 GMT.

Kiwi plunged across the board on dovish forward guidance from the Reserve Bank of New Zealand (RBNZ).

At its policy meet today, the RBNZ kept official cash rate (OCR) steady at 0.25%. The committee maintained “the balance of economic risks remains to the downside”.

Technical studies support upside in the pair. Major trend as evidenced by the GMMA indicator is bullish. 

Pullback is likely to be shallow with the the pair showing a bounce off 200H MA support at 0.6450.

21-EMA also offers strong support at 0.6396. We see major weakness only on break below 200-DMA. 

Resumption of upside will see test of 88.6% Fib at 0.6608. Further upside unlikely as RBNZ has expressed concerns about the strength in the kiwi, raising speculation for future currency intervention.

Major Support Levels: 

S1: 0.6454 (5-DMA)

S2: 0.6396 (21-EMA)

S3: 0.6319 (200-DMA)

Major Resistance Levels: 

R1: 0.65 (Psychological mark)

R2: 0.6585 (June 10 high)

R3: 0.6608 (88.6% Fib)

Summary: NZD/USD has formed a 'Spinning Top' on the daily candle at the time of writing. The Kiwi may suffer deeper losses ahead in the day if the global equities come under pressure. Pullback is likely to be shallow. But caution advised as the RBNZ has expressed concerns about the strength in the New Zealand dollar, which suggests possibility for future currency intervention.