NZD / USD up, can buyers continue their momentum?

The rise pauses as buyers meet remarkable levels of resistance

ForexLive

Overall, the highs of mid – January, around 0.6845-50, are currently helping to limit gains for both pairs after the RBNZ gave a boost to the kiwi, as the central bank was less accommodating than expected earlier today.

The kiwi bounced on short covers, but the bounce came in particular, the price having failed to break under the AM at 100 days (red line) at 0.6728 and even returned over AM to 200 days (blue line) at 0.6754. This brings buyers back to the driver's seat, but the short-term chart indicates that the comfort zone should not be taken for granted.

The move higher in the kiwi saw it return above the two key moving average keys, although the highs do not reach the retracement level of 61.8 from the recent swing movement, down at 0.6857.

Basically, the decision made earlier is much more related to short coverage than a major change in kiwi sentiment. The RBNZ is still far from being able to raise rates, but their earlier position simply means they are not yet becoming more neutral.

A rate cut is not on the horizon for the moment and the markets are only revising their anticipation for the moment. In this case, this will not generate continuous gains for the kiwifruit, as it is only a revaluation of the market ratings.

US-China trade negotiations remain the main short-term event, so expect the kiwi sentiment (as well as risky badets) to focus a lot on that.

I expect that kiwi gains earlier will be slightly mitigated, so beware of a possible setback to test the 200-hour MA. But later in the week or early next week, the evolution of trade will probably dictate the next decision, and I think it is more than likely that the situation will take a more positive turn.

But, all other things being equal, market players will continue to decline about RBNZ rate hikes, so expect this to limit material gains for the kiwi as a whole.