The Reserve Bank of New Zealand (RBNZ) kept the Official Cash Rate unchanged at 1.75%. The kiwi fell 0.9% to .6833 after the Bank gave a more dovish message. The RBNZ noted that monetary policy will remain accommodative for a considerable period. Numerous uncertainties remain and policy may need to adjust accordingly.
House price inflation has moderated further, especially in Auckland. The slowing in house price inflation partly reflects loan-to-value ratio restrictions and tighter lending conditions. This moderation is projected to continue, although there is a risk of resurgence given the continuing imbalance between supply and demand.
Price action on the NZD/USD daily chart highlights tumble as many analysts expected the RBNZ to raise their inflation outlook. Since respecting the 50-day SMA in the middle of April, price has consolidated around the .6830 to .6970 region. If price breaks below the .6800 level, we could see a major move down toward the .6750 level. It is around that area that price could form a bullish ABCD pattern. Key resistance remains .7000 to .7150 zone.
The Trade: Buy NZD/USD at .6765 with a stop loss at .6715 and a take profit at .6815. The Risk/Reward Ratio is 1:3