NZD/USD lingers near the 0.6400 handle ahead of European trading
The decision by the RBNZ earlier to leave its OCR unchanged saw the kiwi spike higher, with NZD/USD rising above both its key hourly moving averages.
As such, buyers are now in near-term control and the jump saw price move above the 0.6400 handle before retracing a little to levels just around the figure level.
That is now the key resistance area that buyers must try and break above to keep the upside momentum going, as well as breaking the 61.8 retracement level @ 0.6411.
Despite maintaining an easing bias, the willingness for the RBNZ to keep monetary policy steady suggests that even a Q1 2020 rate cut may not necessarily be on the cards.
As such, with many more months of economic data to navigate through, trading sentiment in the kiwi will then shift more towards how the global economy and risk will perform.
US-China trade talks will be one of the major risk factors in that regard but also keep an eye out on NZ economic data from time to time.
I am of the view that the RBNZ may find itself more disappointed by the data over the next few months but we can only trade what is in front of us and until the data shows further sluggishness, it will be tough to imagine markets significantly pricing in rate cuts again – especially after getting burned today.
For NZD/USD, any further upside momentum will also be tested by the 100-day moving average @ 0.6448. Ultimately, that will be a key resistance level that buyers have to try and break above before attempting a move towards the 0.6500 handle.