The New Zealand dollar slipped lower the greenback following the Reserve Bank of New Zealand’s rate decision earlier this week, and the high-yielding currency may continue to face increased selling pressures over the near-term as the central bank maintains a dovish policy stance going forward.
Currency Pair: NZD/USD
Chart: 60 Min Charts
Short-Term Bias: Flat
Analysis
The New Zealand dollar slipped lower the greenback following the Reserve Bank of New Zealand’s rate decision earlier this week, and the high-yielding currency may continue to face increased selling pressures over the near-term as the central bank maintains a dovish policy stance going forward. After reaching a high of 0.6349 in October, the NZD/USD slipped to a low of 0.4894 in March as investors curbed their appetite for high risk/reward investments, and as the OECD calls for the RBNZ to lower the cash rate to 2.00%, expectations for further easing is likely to weigh on the pair in May. Over the next few hours of trading, we could see the pair attempt to retrace the sell-off from earlier this week, and the kiwi-dollar may attempt to push above the 120 SMA however, as European traders are offline for Labour Day, thin volume is likely to hold the pair within a tight range until the open of the U.S. market. Nevertheless, as U.S. regulators are expected to release the results of the bank ‘stress test’ next week, increased turmoil in the financial sector could weigh on market sentiment as the preliminary results showed at least 6 of the 19 biggest banks tested will be required to raise more capital, and as the International Monetary Fund forecasts global write-downs to reach $4.1T next year, mounting fears surround the global financial system could lead to a surge in risk aversion over the following week. Be sure to check out other Technical Reports from DailyFX for additional information on the major currency pairs.
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