Missed the NZD trade? What's next?

As expected, the Reserve Bank of New Zealand (RBNZ) kept interest rates unchanged yesterday but did provide some surprises to the market; extending the timeline for a potential rate cut, and even noted its consideration of a rate hike. This unexpectedly hawkish stance sent the NZDUSD higher.

Before the announcement, markets saw an ~80% chance of a rate cut by November, but this probability has now dropped to ~50%.

Despite this, bullish momentum seemed capped. After probing above 0.6117 several times (with diminishing conviction), buyers turned into sellers. Governor Orr's comments during the post-decision press conference were perceived as slightly less hawkish, which helped push the price back down. Additionally, over in the US, minutes from the two-day Federal Open Market Committee meeting ending May 1 showed that while participants felt the policy was “well positioned,” several officials expressed a willingness to tighten policy further if necessary.

If the price declines, the next key target could be the 100-day moving average at 0.60712, which coincides with a 50% Fibonacci retracement level. However, support is potentially located at .6083 before this, with resistance kicking in at the session high above .6150.