The Trend of the Day NZD/USD
The Reserve Bank of New Zealand kept its benchmark interest rate at 2.5% and felt no need to raise rates due to the strong currency acting as a deterrent to inflation. However, the central bank is planning to raise rates because their economy is showing signs of recovery.
Interest rates and the expectations of where rates will be going in the future are the main drivers of currency trends. So though the rate was unchanged, the future expectation is that rates will move higher. In anticipation, traders may look to enter early to take advantage of higher rate of return.
In fact, since breaking its daily trend line in October, Kiwi dollar has moved 600 pips so a low at around the .7000 area and created a double bottom. A double bottom is a bullish reversal pattern and we can anticipate that the NZD/USD will return to its old highs in the .7626 area. Price has moved up nearly 300 pips from the low and looks poised to move higher. Stochastics has turned up from the oversold area. Look to a 4-hour chart and use an oscillator like stochastics to find a good entry in the direction of the uptrend.
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.