NZD/USD Outlook ahead of the RBNZ Interest Rate Decision

Summary:

NZD/USD is on a bearish consolidation despite the strong New Zealand retail sales data. Investors are now keen on the RBNZ interest rate decision.

NZD/USD is on a bearish consolidation pattern despite the better-than-expected New Zealand retail sales numbers. According to Statistics New Zealand, the country’s retail sales rose by 2.5% in the year’s first quarter. In 2020’s final quarter, the numbers had dropped by 2.7%. With the exclusion of food and energy, core retail sales were up by 3.2% QoQ compared to the prior plunge by 2.9%.

Investors are now keen on the RBNZ interest rate decision scheduled for Wednesday. Analysts expect the central bank to leave the rates unchanged. However, a hawkish tone is likely as the country records significant recovery from the coronavirus pandemic. The government expects the New Zealand economy to grow by 2.9% in 2021 and 4.4% in 2022. Notably, a hawkish tone from RBNZ would push NZD/USD higher.

NZDUSD Technical Outlook

NZD/USD is on a bearish consolidation pattern. At the time of writing, it was down by 0.01% at 0.7176. On a three-hour chart, it is trading below the 25 and 50-day exponential moving averages.

I expect NZD/USD to continue trading sideways as investors await further cues from the RBNZ interest rate decision. On the lower end, it is likely to find support at 0.7150. At the same time, it may experience resistance at 0.7189. Notably, a move below 0.7200 will invalidate this thesis.