• NZD/edged higher on Monday as traders positioned cautiously ahead of the Reserve Bank’s policy decision later this week.
• Markets have fully priced for a cut in kiwi interest rates this week, but less sure about the prospect of yet more easing afterward.
• In July, the central bank kept rates unchanged at 3.25%, citing short-term inflation risks, while indicating it was prepared to cut if price pressures eased.
• Inflation stood at 2.7% last quarter, within the RBNZ’s 1–3% target band, while expectations eased. However, unemployment rose to 5.2% in Q2, the highest since late 2020, and with broader economic weakness, the central bank may be pushed to cut rates to aid recovery.
• Immediate resistance is located at 0.5954(SMA20), any close above will push the pair towards 0.6014 (38.2%fib).
• Support is seen at 0.5915 (50%fib)and break below could take the pair towards 0.5869(Lower BB).
Recommendation: Good to sell around 0.5950 with stop loss of 0.6000 and target price of 0.5860
