NZDUSD pair rose slightly during today's session and is trading around $0.6970 level as investors are focusing on the Reserve Bank of New Zealand interest rate decision which will be released at 02:00 am BST. The central bank is expected to raise its official cash rate by 25bps to 0.5%, however some economists expected even a 50 bps increase after better than expected second quarter GDP figures. It would be the first rate hike since June of 2014, aiming to curb inflation and housing soaring prices despite Covid-19 risks. Majority of the economists believe that the upcoming meeting will be the beginning of a succession of hikes over the coming year, taking the rate to around 1.5% in August 2022.
Looking at the technical situation on the NZDUSD daily chart, one can see that we are still dealing with a downtrend. Nevertheless, there has been a clear rebound in recent days and if current sentiment prevails then the upward correction may be extended and we may witness an attack on the downtrend line (green dashed line). Should break higher occur, then upward move may accelerate towards the upper limit of the 1: 1 structure around 0.7175 level. On the other hand, if sellers manage to regain control, an attack on the support zone at 0.6800 cannot be ruled out.
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NZDUSD interval D1. Source: xStation5
When looking at the lower time frame - H1, one can see that the pair managed to break above the EMA 100 (green line), and is heading towards the resistance zone at 0.6985. Should a break higher occur, upward move may accelerate. On the other hand, in case of a bigger downward move start, the area at 0.6935 remains a key mid-term support.
NZDUSD interval H1. Source: xStation5
