The greenback generally lost strength last week against most currencies including the Kiwi dollar as the debate over the debt ceiling in the USA continues and expectations have risen further that the Fed will pause tightening this summer. The RBNZ is widely expected to call for a single hike to 5.5% early on Wednesday morning GMT and possibly hint that further hikes this summer might be appropriate. Annual inflation in New Zealand at 6.7% is down from the peak but significantly higher than in the USA and still more than double the upper region of the RBNZ’s target of 1-3%.
If there are signs of hawkishness from the RBNZ this week, NZDUSD might have significant room to gain in the medium term. The current area slightly below 63c coincides with the 23.6% weekly Fibonacci retracement, but a breakout from here probably wouldn’t face significant for several cents upward except for this month’s earlier highs around 63.7c. With the slow stochastic neutral and the price above all four moving averages, the upside seems favourable from indicators too. Although the RBNZ is this week’s main release for the Kiwi dollar, potential traders of this symbol mustn’t ignore the FOMC’s minutes or Friday’s inflation data from the USA.
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