NZD/USD: testing tactical support

Reserve Bank holds the rate

The Reserve Bank of New Zealand kept the interest rate at 0.25%, where it has been since March. However, it announced the expansion of the quantitative ease program to $60bln from the previous $33 to make sure the borrowing cost if low enough. It stressed that it is ready to reduce the interest rate as well as expand the asset purchase program should there be an indication for it.

Short term

On the H1 chart of NZD/USD, the currency pair fell to the tactical resistance of 0.6000, which formed at the end of April and was visited a week ago. Shortly after, it bounces upwards. From the short-term perspective, that’s a significant change of movement base to lower levels and below the Moving Averages, which will be checking now any serious bullish potential.

Long term

From a larger perspective, the NZD/USD shifted to the lower boundary of the core movement channel, testing the support of 200-MA slightly above the tactical resistance of 0.6000. Very likely, it will get back up to stay within the area above 200-MA to test 100-MA. If the currency moves above to cross the resistance of the 100-MA and test the 50-MA, that would mean that the monetary policy news hasn’t had much effect on the currency pair in the mid-term.