News & Analysis
News & Analysis

RBNZ Cash Rate Decision Preview

20 February 2023 By JinDao Tai

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The NZDUSD has been on a decline since the start of February 2023, with the price reversing strongly from the high of 0.6540 ending the previous week bouncing off the 200-day moving average and previous swing low price level of 0.6190.

This week, we have the Reserve Bank of New Zealand (RBNZ) due to release their interest rate decision. Current annual inflation in New Zealand stands at a three-decade high of 7.2%, while the quarter-on-quarter data released in January signaled slightly higher than expected CPI growth at 1.4% (Forecast: 1.3%). This has led the market to anticipate that the RBNZ is likely to hike rates by 50bps, taking rates from 4.25% to 4.75%.

If the RBNZ does increase rates by 50bps as expected, this is likely to further strengthen the New Zealand dollar, especially as the NZDUSD had found strong support along the 200-day moving average on Friday.

In addition to the interest rate decision possibly driving prices higher, price action on the NZDUSD has also formed a Bullish Regular Divergence with the Relative Strength Index (RSI) at the support level, indicating a further likelihood for the NZDUSD to stage a reversal, to trade higher.

However, for a sustained move to the upside, the price of the NZDUSD would have to break above the near-term resistance area at 0.6270, which also aligns with the 23.60% Fibonacci retracement level. Look for the NZDUSD to rise toward the key resistance and round number level of 0.64, which coincides with the 61.8% Fibonacci retracement level.

Disclaimer: Articles are from GO Markets analysts and contributors and are based on their independent analysis or personal experiences. Views, opinions or trading styles expressed are their own, and should not be taken as either representative of or shared by GO Markets. Advice, if any, is of a ‘general’ nature and not based on your personal objectives, financial situation or needs. Consider how appropriate the advice, if any, is to your objectives, financial situation and needs, before acting on the advice.