The pair is preparing for a mid-week rally, approaching the 0.6116 level. These current values mark the highest point for the Kiwi in two months, following the Reserve Bank of New Zealand's decision to leave its monetary policy framework unchanged during its May meeting.
The interest rate remains at 5.5% per year, as expected.
The RBNZ has determined that maintaining tight monetary policy is necessary to ensure inflation returns to target within the expected timeframe. The central bank has pointed out a cooling of the labor market and an increase in unemployment as potential risks. Supporting factors include higher housing rents, insurance costs and increasing utility rates.
According to the official forecast, the consumer price index in New Zealand is expected to return to the 1-3% range by the end of 2024.
Overall, the NZD exchange rate is about to rise. The RBNZ's policy is considered balanced and consistent, helping to mitigate the risks of excessive volatility for the New Zealander.
On a broader scale, investors are awaiting the minutes of the latest US Federal Reserve meeting, which will provide more information on the Fed's next steps.
NZD/USD technical analysis
On the NZD/USD H4 chart, a consolidation range has formed around the 0.6000 level. After a bullish breakout, a wave of growth was achieved to 0.6151. A consolidation range is currently emerging around 0.6114. A break down from this range could open the possibility of a drop to 0.6000, the first target. After reaching this level, a correction wave to 0.6075 is possible (testing from below), followed by a new decline along the trend to 0.5853. This scenario is technically supported by the MACD indicator, with its signal line above zero but directed strictly downwards.
On the H1 chart, downward momentum has formed to 0.6114. Today the market could make a correction to 0.6132. After this correction, the growth wave is expected to continue up to 0.6075, with the prospect of further development of the trend.
Summary
The NZD/USD pair is rising steadily, driven by the Reserve Bank of New Zealand's consistent monetary policy. Technical indicators suggest possible corrections and further growth, with a focus on the upcoming US Federal Reserve minutes for further market guidance.
By RoboForex Analysis Department
Disclaimer
Any forecast contained herein is based on the author's personal opinion. This analysis cannot be considered trading advice. RoboForex assumes no responsibility for trading results based on the trading recommendations and reviews contained herein.
