The New Zealand dollar (NZD) stole the spotlight in the Asian market session this morning (Wednesday) with an energetic surge following the outcome of the New Zealand central bank’s monetary policy meeting.
The Reserve Bank of New Zealand (RBNZ) kept interest rates unchanged at 0.25%, but came as a surprise to announce its bond -buying program would end next week.
The implementation of this tapering measure is one of the methods to tighten policy by reducing the money supply in the economy while encouraging an increase in the value of the currency.
As such, the NZD dollar surged strongly in the Asian session despite other major currencies being weighed down by the strengthening US dollar since yesterday after US inflation data was published high.
On the price chart of the NZD/USD pair, it can be observed that the price decline in the New Yoek session yesterday tested the support zone of 0.69300.
However, the price managed to rebound again in the Asian session this morning around 80 pips above the level of 0.70000 in the SBR zone (support become resistance).
Investors are optimistic that the price increase will continue to reach the resistance level of 0.71000 reached last week's rise.
However, the rise is likely to be curbed by the strengthening factor of the US dollar in the market.
If the price declines again, the support zone at 0.69300 will return to focus again to be tested.
The lower price drop from the zone will record the latest price low since November 2020.
