NZD: Technical rollback is taking shape for New Zealand Dollar

At the Forex currency market the New Zealand rate demonstrates slight rise on Monday, which is part of technical rollback, following four sessions of sales.

Forex forecast: MACD indicator is in the negative area for the pair NZD/USD and is going down, giving a pair sell signal. Stochastic Oscillator remains in the oversold zone today.

Forex recommendations: Considering the rollback, investors will be interested in the levels of 0.7380 and 0.7400. However, if bears will be back in the market, traders’ targets will be the levels of 0.7350 and 0.7310.

It is worth noting that the New Zealand Dollar continues to be close to the ten- week lows.

Sales of the NZD was caused by the view of the country’s Prime Minister John Key, who said in his interview to Bloomberg News that he would have approved the decision of the Reserve Bank of New Zealand to reduce interest rate from the current 3%; next meeting of the RBNZ is scheduled for 10 March. Politician did not rule out that effect of the earthquake which took place in the South of New Zealand in February can contribute to the rollback of the national economy into the state of recession. 

Therefore, there are strong speculations at the market regarding the rate of the NZRB, which puts pressure on the NZD and forces it to test new local lows.

As a result, sales of the NZD did not take long to wait and the pair NZD/USD has reached a yearly lows once again.

We would remind that at the last meeting in January the Reserve Bank of New Zealand made an expected decision to keep interest rate at the previous level of 3.0% per annum. The Central Bank showed adherence to maintain monetary policy unchanged. In the follow-up comments, the head of the RBNZ, Bollard stressed that the rates will sequentially increase over the next two years.

The data on New Zealand, released on Friday was mixed: index of industrial activity rose to the level of 53.7 in January against 53.2 in the previous period; producer prices at exit/entrance for quarter IV: +0.9%/+0.2% respectively; consumer confidence index ANZ increased to 108.2 in February against 117.1 in January. In addition, Finance Minister of New Zealand said a week earlier that strong domestic currency did not support national economy, and consequently economy looks not quite competitive.

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