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NZD/USD: rate hike on the menu

NZD/USD is trading just below $0.8500. The pair’s moves will be limited by the $0.8500/8430 area ahead of the Reserve bank of New Zealand’s meeting on Wednesday: the RBNZ is expected to raise its benchmark rate by 25 bps to 2.75%.

Note that such outcome is now fully priced in as kiwi has strengthened by more than 3% this year. A very important thing will be what the central bank says in its statement about the future moves of the rate. In addition, NZD/USD is approaching heavy resistance at $0.8550 and $0.8585 ahead of $0.8675 and is close to overbought area.

As a result, if the RBNZ raises rates, we may expect a short-term spike in NZD/USD up to $0.8675 which will be quickly followed by the significant correction.

Chart. Daily NZD/USD

To contact the writer of this story: Elizaveta Belugina at analytics@fxbazooka.com

 

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