- NZD/USD has a massive bullish bias lately.
- The RBNZ planned to increase interest rates today.
- Officials warned about more rate hikes.
The NZD/USD continues to grind towards Wednesday following the latest decisions by the Reserve Bank of New Zealand on interest rates. The pair climbed to the 0.6510 high, nearly 4.70% beyond this month’s lowest level.
RBNZ Rate Decision
The Reserve Bank of New Zealand presented a somewhat hawkish decision on interest rates (Wednesday). That comes as the financial institution extends its fight against persistent inflation. Meanwhile, RBNZ hiked interest rates. That marks the 3rd time it raised the rates since the COVID onset.
Moreover, the bank’s governor promises further monetary tightening, targeting lower inflation between 1% and 3%. The latest data indicated the nation’s inflation increased to over 5% in the first quarter. That came amidst rising energy costs.
Also, the hikes were necessary as New Zealand’s economy recovered from the COVID pandemic at a more lucrative state than most peers. For instance, household balance sheets kept surging as the unemployment rate plunged to record lows.
Moreover, the trade balance remained strong as the nation’s exports saw high demand globally. The statement revealed the Committee evaluated the forecasted OCR path as steady to achieve the primary employment and inflation objective without causing needless instability in the exchange rate, interest rates, and output.
Another catalyst for the pair will emerge during the upcoming Fed Reserve minutes. The minutes will highlight the Fed’s stance on interest rates. Recently, Gary Gensler emphasized more interest hikes by the bank. Moreover, the bank began trimming its balance sheet.
The 4hr chart shows NZD/USD on a massive bullish bias within the past couple of days. Meanwhile, the pair approaches the 38.2% FIB retracement region. Also, the currency surged beyond the 25-day MA (moving average).
The pair printed an ascending channel and hovered between that channel. Meanwhile, the Relative Strength Index kept steady upside trends. Thus, NZD/USD can keep surging, with bulls targeting the crucial resistance zone at 0.6540. A decline beneath the $0.6435 support would cancel the bullish narrative.
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