The NZD/USD pair experienced significant gains after the Reserve Bank of New Zealand (RBNZ) implemented its first rate increase in three years, briefly reaching the 0.5700 level during Asian trading on Wednesday. The central bank’s assertive outlook has helped maintain these gains throughout the day, with expectations of additional rate hikes in future meetings. Moreover, as market attention turns to the FOMC meeting minutes being released later today, the US dollar (USD) has remained relatively weak, which could support further advancements for the pair.
From a technical viewpoint, the NZD/USD pair is situated close to the significant level of 0.5715, which aligns with the 100-day exponential moving average (EMA) on the 4-hour chart and the 23.6% Fibonacci retracement from May to June. There is potential for some continued buying that might create an opportunity for bullish traders, which could extend the recent recovery from the lows recorded last month.
On the other hand, the Relative Strength Index (RSI) reading at 58.98 is moderately positive. However, this uptick in momentum suggests a phase of consolidation rather than a definitive breakout, as the NZD/USD pair continues to remain beneath the mentioned resistance. Still, enduring strength could lead to a move toward the 38.2% Fibonacci level, positioned at 0.5767, with the 50% retracement around 0.5811. Further up, resistance is evident at the 61.8% retracement at 0.5855, the 78.6% level at 0.5917, and the cycle high at 0.5996, creating a series of obstacles to any rebound.
On the downside, the main structural support appears to be around the Fibonacci anchor at 0.5626, where we might see buyers stepping in if the pair continues to decline.
