The New Zealand dollar ended lower against the U.S dollar in last week’s trading session after Reserve Bank of New Zealand assistance governor John McDermott said that the central bank is not considering a rate hike at present. On the other hand, RBNZ is looking at signs of weakness in demand and inflation that might warrant a rate cut. Markets perceived that RBNZ is shifting to a neutral bias with downside risks.
Initial bias this week remains bearish as long as 0.7740 resistance holds after a double-top chart pattern formation emanated on the 4 hours chat. Also 21 EMA is converging 55 EMA signalling the rally is waning off and SSRC oscillator shows more bearish momentum is expected in the nearest future. Am expecting further decline to 0.7420/0.7390 supports initially this week.
However on the upside, a clear break of 0.7740 will push price further to 0.7889 and dampen the current bearish case.
In the week ahead investors will be looking to Wednesday’s Fed statement for clues on the possible timing of a rate increase. Investors will also be focusing on Wednesday’s preliminary reading on U.S. first quarter growth as well as reports on inflation, consumer confidence and manufacturing.
Central bank meeting in the New Zealand will also be in focus to shed more light on the single currency.