NZD/USD forecast: signal ahead of the RBNZ rate decision

The NZD/USD exchange rate continued rising ahead of the closely watched Reserve Bank of New Zealand (RBNZ) interest rate decision. The pair rose to a high of 0.6102, its highest point since August 10th. It has soared by over 5.8% from its lowest point in November.

RBNZ interest rate decision ahead

The biggest NZD news of the week will be the upcoming interest rate decision by the Reserve Bank of New Zealand. Economists polled by Reuters and Bloomberg believe that the bank will leave rates unchanged at 5.50%.

If this happens, it will be the fifth straight time that the bank has left interest rates unchanged. Like other central banks, it has hiked rates from the pandemic-era low of 0.25% in a bid to fight the elevated inflation.

The most recent data shows that New Zealand’s economy was still facing persistent inflation that is above the bank’s target. According to Statistics New Zealand, the headline Consumer Price Index (CPI) rose by 5.6% in the 12 months to the September quarter, an improvement from the previous 6%.

That inflation figure is much higher than the RBNZ target of 2.0%. In its last monetary policy meeting, the bank maintained a hawkish tone and warned that rates needs to remain at an elevated level for a while. 

Therefore, another rate hike is still possible on Wednesday in line with what the Reserve Bank of Australia did earlier this month.

New Zealand’s economy is not doing well as consumers remain challenged by high inflation. Data showed that the economy expanded by 0.9% in the second quarter as it exited a technical recession. There are signs that the worst are now behind it for now.

Meanwhile, the Federal Reserve has maintained a moderately dovish tone in its November. It left rates intact and maintained its data dependence. Analysts expect it to slash rates in the second half of 2024.

NZD/USD technical analysis

NZDUSD chart by TradingView

The NZD to USD price has drifted upwards this week as traders waited for the upcoming RBNZ decisions. It has risen from a low of 0.5780 to a high of 0.6115. Along the way, it has moved above the upper side of the descending channel.

The pair has also risen above the 25-day and 50-day moving averages while the Relative Vigor Index (RVI) has moved above the key point at 0.20. It is approaching the second resistance of the Woodie pivot point.

Therefore, the outlook for the pair is bullish, with the next point to watch being at the third resistance at 0.6220. The stop-loss of this trade will be at 0.600.