Chart - Courtesy Trading View
NZD/USD was trading sideways at daily cloud top support, NZ Hipkins promise to raise wages has little impact on the kiwi.
New Zealand Prime Minister Chris Hipkins announced that minimum wages will be increased in line with the Consumer Price Index (CPI) and noted that a rise in the minimum wage will have a small inflation impact.
The Reserve Bank of New Zealand (RBNZ) has not confirmed that the interest rate has peaked despite a marginal slowdown in the fourth quarter figures.
Markets currently imply rates will peak at 5.25%, a little below the central bank's own projection of 5.5%.
New Zealand inflation is running hot at 7.2% and even a minor upside trigger to the inflation rate could create significant troubles for the RBNZ.
RBNZ holds its next policy meeting on Feb. 22 and is widely expected to raise rates by 50 basis points to 4.75% and also flag further tightening.
Technical Summary:
NZD/USD has found rejection at 110-week EMA. Major trend in the pair remains bullish as long as pair holds above 200-DMA. The pullback from 110-week EMA and bearish RSI divergence on the daily charts raises scope for consolidation at current levels.
Resumption of upside will see test of 200-week MA above 0.66 mark. Bullish invalidation likely below 200-DMA and daily cloud.
Support levels - 0.6265 (21-week EMA), 0.6186 (200-DMA)
Resistance levels - 0.6350 (5-DMA), 0.6395 (21-EMA)
Guidance: NZD/USD will be a BUY on dips with Stop Loss at 200-DMA and Target at 200-week MA at 0.66.


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