Anna 
The New Zealand Dollar (NZD) witnessed a decline of 1.2% since the beginning of Wednesday, following the Reserve Bank of New Zealand’s (RBNZ) recent decisions and comments. The central bank opted to leave its key interest rate unchanged at 5.5%, delivering a softer stance than anticipated. Market expectations had included the possibility of a rate hike during this meeting, but the RBNZ conveyed a willingness to maintain the current rate levels.
In its accompanying commentary, the central bank indicated its preparedness to sustain interest rates at existing restrictive levels for a more extended period than what bond markets had envisioned. This decision by the RBNZ aligns with the broader context of major developed countries’ central banks discussing potential rate cuts.
It’s noteworthy that New Zealand has increased rates by 525 basis points in this cycle, a magnitude comparable to the tightening by the Federal Reserve, setting it apart from most other central banks globally.
The RBNZ’s dovish stance, despite inflation surpassing the target, has played a significant role in the US Dollar’s strength against its counterparts on Wednesday.
Considering the implications beyond New Zealand, the technical picture for the Kiwi has undergone a shift. The NZD/USD reversed its upward trend last week, failing to breach the 50-day moving average. The subsequent decline, indicating a momentum shift, often marks the beginning of a more extended trend.
However, the upcoming challenge for the bears lies in the 200-day moving average, currently positioned at 0.6070 against the current price of 0.6090. The pair, having fluctuated above and below this curve since late January, faces a crucial juncture. While a reevaluation of monetary policy provides a reason for a breakthrough, confirmation will hinge on the breach of the 200-day moving average from top to bottom.
