NZDUSD Falls After RBNZ Decision – But How Low Can it Go?

Summary:

The NZDUSD is down for the third consecutive day after the RBNZ interest rate decision. How low can the currency pair fall? Here are the odds

The NZDUSD pair is down for the third straight day as traders react to the RBNZ rate decision. It is trading at 0.6612, which is the lowest it has been since September 9.

In its interest rate decision today, the New Zealand central bank decided to leave interest unchanged at 0.25%. That was in line with what most analysts were expecting. It also left its Long-Term Asset Purchases (LSAP) limit at N$100 billion.

The biggest change in the monetary policy decision was the bank’s statement that it is considering another fund to help support the country’s businesses. This policy will start by the end of the year and is a sign that the bank considers negative rates as a measure of last resort.

The decision by the RBNZ comes at a time when the New Zealand economy is going through its toughest test in decades. It declined by more than 12% because of the pandemic. That decline was worse than that of Australia whose economy contracted by just 7%.

Still, there are signs that the economy is improving. The country has already handled the second wave of the virus well and many businesses have started to reopen.

NZDUSD technical outlook

The NZDUSD is trading at 0.6612. On the daily chart, this price has moved below the 20-day weighted moving average. It has also formed a three black crows pattern, which is usually a bearish sign. Also, the price formed a shooting star pattern on 18^th September. This pattern is usually a bearish signal.

Therefore, I suspect that the price will continue falling as bears attempt to move to the support at 0.6600. This support connects the lowest points in June, July, and August. On the flip side, a move above the resistance 0.6700 will invalidate this trend.