NZD/USD is the top mover for today so far, up 0.80% at the time of writing. On the one hand, Dollar is broadly sold off after US mid-term elections. On the other hand, strong employment data came in at an ideal time, just before RBNZ rate decision in the upcoming Asian session.
RBNZ is widely expected to keep the Official Cash Rate unchanged at 1.75%. And, the central was very clear in its last statement that it intend to keep OCR at this level “through 2019 and into 2020”. More importantly, RBNZ said “the direction of our next OCR move could be up or down.”. There has been some bets that the next move is a cut. The question is, with unemployment rate hitting decade low at 3.9%, and employment rate jumped to record at 68.3%, would RBNZ turn less dovish? We’ll see within a couple of hours.
Technically, NZD/USD is now at a very important resistance zone. That is, 38.2% retracement of 0.7436 to 0.6424 at 0.6811, which is close to 0.6779 support turned resistance. Decisive break there will solidify the case of bullish medium term reversal. And further rally should at least be seen to 61.8% retracement at 0.7049 and above. This is our preferred case for now as long as 0.6689 minor support holds.
However, break of 0.6689 will indicate rejection by this key 0.6779/6811 resistance zone. That will revive medium term bearishness and could bring retest of 0.6424 low as next step.