NZD/USD steady ahead of RBNZ Announcement

The New Zealand dollar is steady in Tuesday trade. Early in the North American session, NZD/USD is trading at 0.6670, up 0.05% on the day. The US dollar started the week with broad gains, and NZD/USD declined by 1.2% on Monday, its worst one-day performance since early August.

RBNZ expected to hold the course

The Reserve Bank of New Zealand will make its rate announcement on Wednesday. The central bank sliced rates in dramatic fashion back in March, when policymakers cut rates from 1.00% to 0.25%, in a concerted effort to stabilize the economy as the Covid-19 pandemic hit the country. The bank has since held rates at 0.25% and no change is expected at the upcoming meeting. Investors will be scrutinizing the rate statement, looking for any hints that policymakers are considering negative rates.

With the Federal Reserve signaling that US rates will remain close to zero until 2023, central banks are taking a closer look at reducing rates, perhaps even below zero. The fact that policymakers are entertaining the possibility of negative rates can quickly dampen sentiment towards a currency. This was evident last week as the British pound weakened after the Bank of England said that negative rates had been a topic of discussion for bank members. If the RBNZ rate statement states that negative rates are on the table, we can expect the New Zealand dollar to respond with losses.

.

NZD/USD Technical

• NZD/USD faces resistance at 0.6747. The next resistance line is at 0.6826
• There is support at 0.6621, followed by a support line at 0.6574
• NZD/USD broke below the 20-day MA early in the week. This is an indication of a downward trend

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.