NZD/USD stalling below 0.7000 ahead of RBNZ

• The Reserve Bank of New Zealand (RBNZ) Interest Rate Decision and Monetary Policy Statement are scheduled at 21:00 GMT, will be followed by a Press Conference. 
• The RBNZ is widely expected to leave rates on hold at 1.75% until mid-2019.
• The falling NZD’s exchange rate and higher commodity prices have been the key drivers for inflation. 

The NZD/USD is trading at around 0.6983 up 0.16% on Wednesday ahead of the RBNZ rate decision.

The kiwi rebounded from the 0.6950 level in the early European session and is consolidating just below the 0.7000 handle at the time of writing. 

The main event for the NZD-related pairs is the Reserve Bank of New Zealand (RBNZ) Interest Rate Decision and Monetary Policy Statement scheduled at 21:00 GMT followed by a Press Conference at 22:00 GMT. 

It will be the first Monetary Policy Statement (MPS) under Adrien Orr, the new RBNZ Governor. His mandate includes promoting full employment as well as price stability. He is widely expected to leave the RBNZ outlook for the Overnight Cash Rate (OCR) unchanged at 1.75%. The RBNZ statement and the subsequent press conference will be closely scrutinized for any changes in policy’s future decisions or even wording. 

Since the last RBNZ meeting in March, developments have been rather mixed. On the inflation level, the Consumer Price Index fell to 1.1% year-over-year in the first quarter, but the RBNZ policymakers were expecting the drop and were likely not surprised by the data. However, what is surprising is the higher commodity prices and the decline in the NZD exchange rate which are both inflation positive. In fact, the kiwi’s exchange rate has fallen below the forecast of the RBNZ and if the Bank mentions it in its Monetary Policy Statement it can give NZD a momentary boost. 

Meanwhile, the US dollar is mixed on Wednesday as the market is digesting the US withdrawal from the Iran nuclear deal. The consequences can be worsening geopolitical relations with China, Russia and of course Iran. 

NZD/USD 4-hour chart 

The main trend is bearish and support is seen at 0.6948 swing low and at the 0.6900 figure. To the upside, the bulls will likely meet resistance at 0.7000 handle and at 0.7050 swing high followed by the 0.7100 handle. The kiwi is trading below its 50, 100 and 200-period simple moving average on the 4-hour chart suggesting a strong bear trend. However, the trend has been slowing down and bulls are trying to reverse it. A clear break above the 0.7050 and 0.7100 can put the bear trend at risk.