NZD continues to descend

After yesterday's weak inflation data, NZD/USD continues its descend as the RBNZ releases property cooling measures. A consultative paper was released by RBNZ this morning, stating that it intends to introduce new macro-prudential measures nationwide to mitigate systematic risks to bank from mortgage lending.

Today’s announcement will most probably lead to the markets believing that the central bank to reduce its official cash rate sooner rather than later. All else being equal, lowering interest rates will make it cheaper to finance lending to purchase a house.

Technical Insights

Short term (15min) chart of NZD/USD:

Trend Analysis: Bearish (50 SMA below 200 SMA).

Levels Analysis: Critical support at 0.70135 and resistance at 0.70680.

Takeaway: Price may start to pull back to the previous resistance level at 0.70680 and resume its downtrend base on the current bearish sentiment in NZD.



Long term (Daily) chart of NZD/USD:

Trend Analysis: Bullish (50 SMA above 200 SMA).

Levels Analysis: Critical support at 0.68580 and resistance at 0.73095

Takeaway: Although bullish in a longer term perspective, the current short-term bearish sentiment of NZD/USD may pull price back to the previous support at 0.68580.