NZD/USD - NZD/USD Tumbles On RBNZ’s Unusual Decision - 07/15/2016 (GMT)

The New Zealand dollar suffered a significant sell-off of more than 1.5% against the dollar on Thursday and early Friday as the Reserve Bank of Australia announced that will provide a non-scheduled update on the economy on July 21st. The last RBNZ policy meeting was in June and the next one in August. The unusual decision makes us worry about the strength of the domestic economy. We don’t doubt that the central bank does not want the kiwi to rise further, especially since low inflation is the main problem of the economy according to the RBNZ Assistant Governor McDermott. Meanwhile, the house prices are too high leaving RBNZ no spaces to act for the time being.

The kiwi is recording the third negative candle, plunging more than 2% over the last three days. The NZD/USD pair continued to look bullish last week, pushing beyond the one-year highest level at 0.7325. At the moment, the currency is making a partial recovery and probably will meet the 0.7080 strong support level which overlaps with the 23.6% Fibonacci Retracement Level of the last big move (January 20 low and July 11 high) and the 200-SMA on the 4-hour chart. On the same chart, the price is moving below the 50-SMA and 100-SMA signalling for a further downside move. Technical indicators are moving in a negative area below their mid-levels.