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Short-Term Nosedive as Late April Support Attacked


The NZD/USD reacted violently this morning to news from the Reserve Bank of New Zealand that today’s interest rate hike would be the last for a while.

The NZD/USD is trading near the 0.61375 ratios as of this writing. Readers are urged to check this price against the actual market value as they glance at this article, in order to gauge the price location of the NZD/USD in real time. The currency pair dove early this morning after the Reserve Bank of New Zealand announced it was done raising interest rates; this after the expected hike of another 0.25% was added this morning.

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The central bank news took NZD/USD trading into a turbulent storm. The NZD/USD essentially dove from a cliff this morning; the currency pair was trading near the 0.62500 realm and within the blink of an eye found its value around the 0.61700 ratio. In the past handful of hours, the NZD/USD has crept lower and is now within sight of values not seen since the last week of April. Technical traders will have to pull out one-month charts to gain insights regarding the mid-term perspective of the currency pair.

The surprise delivered to financial institutions that the Reserve Bank of New Zealand said it is now done raising interest rates, has come to the NZD/USD before today’s big risk events from the U.S. which will happen over the next ten hours.  The possibility that additional volatility in the NZD/USD could be seen today may leave short-term speculators with whiplash depending on the results to come.

  • U.S. Treasury head Janet Yellen will be speaking today and will be asked about debt ceiling concerns as the issue clearly remains a political argument in Congress.
  • Perhaps more important, will be the Federal Reserve’s FOMC Meeting Minutes release later today, which will provide insights about interest rate policy to come from the U.S. in June.

Speculators insisting on trading the NZD/USD today need to understand that this morning’s violent price action may not be the last.  The surprise announcement from New Zealand’s central bank may only be an opening act of volatile trading because the USD could become a catalyst in Forex and affect the broad markets widely depending on the rhetoric from Janet Yellen, which will then be followed by the U.S Federal Reserve’s publication of the FOMC papers. Traders tempted to buy the NZD/USD at current support junctures are advised to use solid risk management with stop loss and take profit orders working.

Current Resistance: 0.61500

Current Support: 0.61325

High Target: 0.61820

Low Target: 0.61170

NZD/USD

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