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NZD/USD forex signal - RBNZ Monetary Policy meeting - 07 Feb 2018

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The Reserve Bank of New Zealand will be holding its first monetary policy meeting of the year today. The meeting will conclude with the release of the monetary policy statement from the RBNZ at 20:00 GMT. Based on the economists' expectations, the RBNZ is forecast to leave the overnight cash rate (OCR) unchanged at 1.75%. The RBNZ held interest rates steady at 1.75% for eight consecutive months.

Today's decision to leave the OCR unchanged comes amid a weaker patch of inflation data during the fourth quarter of last year. Recent economic data showed that New Zealand's inflation rose at a slower pace than expected.

The RBNZ will have to battle a higher exchange rate of the Kiwi dollar. Although low by historical standards, the Kiwi dollar managed to recover some of the losses after it fell sharply after the new labor party government came into power. Investors were uncertain about the potential economic reforms that were being brought by the newly formed government. The government had also mandated that it would also add employment to the RBNZ's mandate besides just inflation targeting.

There is a possibility that the central bank will potentially talk down the exchange rate or at the very least cite concerns about the impact of a higher exchange rate on inflation and growth as well.

Today's forex signal is NZDUSD, the currency pair closed with a bullish engulfing candlestick on the daily chart yesterday. On an intraday basis, we expect NZDUSD to retrace the losses from the previous two days. Following the breakdown of the support level at 0.7333, we expect that the NZDUSD will recover to this level to establish resistance.

Therefore, we would buy dips on an intraday basis and targeting 0.7333 ahead of the RBNZ's monetary policy meeting.

forex trading signal nzdusd 07 Feb 2018

Disclaimer: The article is written for informative purposes only and it is not financial advice. The author does not have any position in the currency pairs mentioned, and no plans to initiate a position. He wrote the article himself and expressed his own opinions. Readers should not treat any opinion expressed by the author as a specific inducement to make a particular trade or follow a particular strategy, but only as an expression of his opinion. All risks and coasts associated with online trading are your responsibility.