The RBNZ is expected to raise rates by 75 basis points in the new trading day (8 PM ET) to 4.25% from 3.5%.The move is intended to slow inflation which saw a spike to 2.2% for the last quarter (expectations 1.5%). The unemployment rate is near all time lows as well at 3.3%. Inflation expectations for the quarter rose to 3.62% from 3.07% in the recent report.
Looking at the hourly chart, the pair moved lower yesterday falling below its 100 hour moving average (blue line in the chart above). However, after approaching the rising 200 hour moving average (green line), sellers turned to buyers and push the price higher in the Asian/early European hours today.
The price rise extended back above its 100 hour moving average currently at 0.61332 (blue line). The high price today moved into a swing area between 0.6155 to 0.61664, and backed off with traders moving the price back toward the 100 hour moving average for a retest. So far the buyers have leaned against that level, keeping the intraday short term bias more to the upside.
Both the 100 and the 200 hour moving average will play risk and bias defining roles through the rate decision. Move below each and the bias shifts back to the downside with the next support target at 0.6059 – 0.6063. Those were swing levels from November 11, November 14, and November 17 respectively. Move below those levels and the 38.2% retracement of the move up from the November low cuts across at 0.60275. The 100 day moving average comes in at 0.60157.
If the bullish bias continues with a more hawkish RBNZ, the highs from November would be targeted near 0.62056. Looking at the daily chart below, the 30.2% retracement of the move down from the February 2021 high cuts across at 0.62568.
Above that, and the falling 200 day moving average at 0.63045 would be targeted (green line in the chart below). The last time the price traded above the 200 day moving average was back in early April 2022.
On November 11, the price move back above its 100 day moving average with momentum. The pair moved into a swing area on the daily chart between 0.6184 and 0.6212. Sellers leaned (see yellow area). The subsequent decline came down to test the swing low going back to July near the 0.60559 level and found support buyers.
So the buyers are making a play. However, they need to continue the work with a break above the highs from November and moves toward the 30.2% retracement and 200 day moving average. Ultimately a break above the 200 day moving average is needed to increase the bullish bias from a longer term prospective.
Some previews of the rate decision from various sources:
