NZD/USD accelerating gains towards 0.7250, RBNZ in focus

The bid tone around the NZD keeps growing bigger in the mid-European session, driving NZD/USD sharply higher to reach fresh five-day highs beyond 0.72 handle.

NZD/USD awaits RBNZ decision

Currently, the NZD/USD pair rallies +0.82% to fresh five-day highs of 0.7230, having found strong support near 0.7190 region. The rally in the NZD/USD pair is largely seen as a shots squeeze as head towards the RBNZ monetary policy decision due tomorrow in the early Asian trades. Markets resort to adjust their positions as its widely expected that the RBNZ may slash rates at its policy meeting in a bid to combat inflation and stem NZD’s sharp rise.

Moreover, broad based US dollar weakness amid falling treasury yields can be also partly attributed to the ongoing bullish momentum seen in the Kiwi. While the resource-linked NZD remains unperturbed by tumbling oil prices and weaker European equities.

Analysts at Westpac noted, “RBNZ to cut by 25bps and signal further easing in the statement, a 30bps cut in their projections.”

NZD/USD Levels to consider

To the upside, the next resistance is located at 0.7250 (psychological levels), above which it could extend gains to 0.7300 (Jul 14 high). To the downside immediate support might be located at 0.7173 (10-DMA) and from there to at 0.7159 (5-DMA).