The NZDUSD moves higher and tests 100 day MA/recent highs. RBNZ meets this week. | Forexlive

The NZDUSD initially fell in the Asian session, and in the process dipped below both the 100 and 200 hour moving averages (blue and green lines). However, when the price reached an upward sloping trend line at 0.6206, the sellers turned to buyers and pushed the price back to the upside and back above the moving average levels (blue and green lines). The momentum has continued with the pair retesting its higher 100-day moving average currently at 0.62945, along with the high price from Friday’s trade at 0.62965.

Recall from Friday, that price high extended above the high from the previous week and 0.62935. The high price today reached 0.62966. So between 0.62935 and 0.62966, there are now three separate highs along with the 100-day moving average. That cluster of resistance has attracted sellers looking to take advantage of the low-risk trading opportunity. If the price were to extend above 0.6300, I would expect buyers turning to sellers on stops.

What now?

With sellers exerting pressure at key resistance levels, the current trading price stands at 0.6285. A drop below the swing area ranging from 0.6263 to 0.62699 would boost sellers’ confidence, while breaking the rising 100-hour moving average at 0.62458 and 200-hour moving averages at 0.62348 would intensify the bearish sentiment. Fundamentally, the Reserve Bank of New Zealand (RBNZ) is set to announce its latest interest rate decision on Wednesday (Tuesday night in New York at 7 PM ET), with a 25 basis point increase to 5.0% expected.

Recall that last month, RBNZ raised rates by 50 basis points following a devastating typhoon. Consequently, GDP dropped by 0.6% in Q4 2022, and the housing market remains under pressure, with home prices declining by 1% in February and expectations of further drops. Approximately 50% of mortgage loans will be repriced within the next 12 months, creating an economic headwind as homeowners anticipate and manage higher payments, which may limit the central bank’s actions.

The OIS curve currently prices in a 25bp hike this week and another 25bp increase by the July meeting, leading to a peak rate of 5.25%. Market expectations foresee a 30 basis point cut by February 2024.

The latest RBNZ projections see a 5.50% peak rate. Markets will be focused on whether that forecast gets revised lower