All Eyes on RBNZ Ahead Of Interest Rate Decision

Andreas Thalassinos
Andreas Thalassinos

27.2.2024

The NZDUSD pair has exhibited an upward direction since February 20, when the Kiwi initiated a reversal to the upside on the price chart, surpassing the technical resistance level at 0.61584 following a decisive break of the downward channel. The bullish rally prompted the entry of bull positions in the market, which pulled the price higher. However, the rally lost its steam before reaching the first potential price target of 0.62258.
The 50-period Moving Average and the Momentum oscillator both support the upward bias, strengthening the notion of a potential rally.
Traders are expected to closely monitor a currency pair in light of the forthcoming release of significant economic data that could potentially impact currency valuations.

Overview

The NZDUSD pair has exhibited an upward direction since February 20, when the Kiwi initiated a reversal to the upside on the price chart, surpassing the technical resistance level at 0.61584 following a decisive break of the downward channel. The bullish rally prompted the entry of bull positions in the market, which pulled the price higher. However, the rally lost its steam before reaching the first potential price target of 0.62258.
The 50-period Moving Average and the Momentum oscillator both support the upward bias, strengthening the notion of a potential rally.
Traders are expected to closely monitor a currency pair in light of the forthcoming release of significant economic data that could potentially impact currency valuations.

Upcoming Events

Wednesday 1:00 am (GMT): Official Cash Rate
Wednesday 1:00 am (GMT): RBNZ Monetary Policy Statement
Wednesday 1:00 am (GMT): RBNZ Rate Statement
Wednesday 1:00 am (GMT): RBNZ Press Conference
Wednesday 1:30 pm (GMT): Prelim GDP q/q (USA)
Thursday 1:30 pm (GMT): Core PCE Price Index m/m (USA)
Thursday 1:30 pm (GMT): Unemployment Claims (USA)
Friday 3:00 pm (GMT): ISM Manufacturing PMI (USA)

Technical Analysis

The NZDUSD has been in a downtrend since December 28, characterized by a series of consecutive lower peaks and troughs. The recent low prices of 0.60380, coupled with the uncertain outlook on rate cuts by the Reserve Bank of New Zealand, prompted the entry of bullish investors into the market, leaving behind evidence of an upside reversal. Specifically, the trough at 0.60494 failed to drop below the preceding trough of 0.60380, and subsequently, prices surpassed the peak of 0.61584, signaling the end of the downtrend and the beginning of a new trend in the opposite direction. The bullish outlook is supported by both the Moving Average and the Momentum oscillator. In particular, prices are trading above the 50-period Moving Average line while the Momentum oscillator hovers above its baseline.

Potential Upside Targets

In the event that the bulls retain control over the market, the following price targets may be considered:

0.62258: The initial price objective can be determined at 0.62258, which corresponds to the 161.8% Fibonacci extension traced from the swing top at 0.61584 down to the swing bottom at 0.60494. 
0.62851: The next potential price target represents a retest of the high price established on February 1.
0.63348:  Subsequently, the price of 0.63348 may pose a resistance, utilizing the 261.8% Fibonacci extension of the previous swing. 
0.63692: Finally, the fourth target is seen at 0.63692, which corresponds to the peak marked on December 12.

Conclusion and Considerations

All eyes are on the Reserve Bank of New Zealand ahead of tomorrow's interest rate decision, which could impact the NZDUSD pair.
It is paramount for traders to remain up-to-date with the latest geopolitical and economic developments, exercise caution, and closely monitor market trends to optimize their investments and mitigate potential risks or losses. 
 

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Andreas Thalassinos
Andreas Thalassinos

Andreas Thalassinos is a recognized authority in the financial markets and world renowned for his expertise in algorithmic trading. He is a Certified Technical Analyst and highly respected lecturer in the education of traders, investors, and financial markets professionals. Thalassinos has played a key role in the development of education within the industry, training tens of thousands of traders of all skill levels. Traders value his seminars and workshops for the rich content, his passionate, charismatic, and lively presentations.