The NZD/USD pair fell to a monthly low near 0.6100 as traders prepared for the Reserve Bank of New Zealand’s (RBNZ) policy decision. The RBNZ is expected to cut its Official Cash Rate (OCR) by 50 bps to 4.75% in an effort to boost economic growth. Investors are also keeping an eye on the US inflation data for clues on the Federal Reserve’s interest rate outlook.
The Kiwi dollar weakened as uncertainty surrounding the allocation of funds in China’s stimulus package affected Chinese markets and failed to prompt a recovery in the NZD. Meanwhile, the US Dollar struggled to extend its gains as investors awaited the release of the Consumer Price Index (CPI) data for September, which is expected to influence market expectations for the Fed’s interest rate outlook.
The NZD/USD pair extended its losing streak for the sixth consecutive trading session and found temporary support near the 200-day Exponential Moving Average (EMA) around 0.6100. The 14-day Relative Strength Index (RSI) has declined to near 40.00, indicating a bearish momentum. More downside is expected if the pair breaks below the horizontal support at 0.6100, potentially leading to further declines towards key support levels.
On the other hand, a reversal move above the 20-day EMA at 0.6230 could drive the pair higher towards resistance levels at 0.6302 and 0.6380. Traders will be closely monitoring these key levels for potential trend reversals in the NZD/USD pair.
Overall, the NZD/USD pair remains under pressure ahead of the RBNZ’s policy decision and the US inflation data release. Traders should carefully watch for any developments in both events, as they could have a significant impact on the direction of the currency pair in the coming days.
