Reversal Lower Following Highs after another Pause

The NZD/USD has produced early fireworks this morning, but remains solidly within its mid-term price range after the RBNZ did not raise its Official Cash Rate.

The NZD/USD is trading near the 0.62030 ratio as of this writing.  In earlier price action this morning a high was made near the 0.62400 level, but then a stumble lower occurred. The NZD/USD has experienced price volatility this morning because the Reserve Bank of New Zealand announced their Official Cash Rate. The central bank kept to its word and remained dovish regarding its monetary policy while also continuing to warn that inflation remains uncomfortably high.

However economic data from New Zealand is within recessionary territory and the RBNZ also acknowledged this fact. The high made this morning in the NZD/USD did not break resistance levels created last month when a high of nearly 0.62480 was made on the 16^th of June. And the NZD/USD certainly remains under the 0.63000 price which was traded rather consistently in May.

The NZD/USD traded near a high around the 0.65375 ratio on the 2^nd of February, this when many financial institutions were positioning for a weaker USD.  The ability to reach those apex highs after touching a low of about 0.55200 in the middle of October 2022 demonstrates the strong bullish trend which took place for a handful of months.

However, since reaching those high water marks in early February the NZD/USD has incrementally traded lower, but although a high was seen this morning traders of the currency pair certainly did not start a bullish parade which could be sustained. The price of the NZD/USD actually is touching values it traded in the third week of July in 2022. Perhaps pointing to rather solid equilibrium for the NZD/USD and an opportunity to test its support and resistance levels based on current behavioral sentiment.

• Consumer Price Index results will come from the U.S in a few hours and the NZD/USD will react to the new information. Weaker than expected inflation data from the U.S could create a bit of a buying surge in the NZD/USD.
• A stronger than expected inflation outcome from the CPI today and tomorrow’s Producer Price Index numbers could spark some selling of the NZD/USD. Risk management needs to be used and speculators should brace for the potential of volatility.

Current Resistance: 0.62175

Current Support: 0.62010

High Target: 0.62410

Low Target: 0.61550

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