The RBNZ held its cash rate at 2.75% on October 28, surprising markets that had heavily priced in a 25-basis-point hike to 3.00%. The probability of a hike ahead of the decision was estimated near 88%, with some reports suggesting an increase was almost fully priced.
Despite the surprise hold, the decision carried a hawkish bias:
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A narrow 4–3 vote: Three members favored raising the cash rate to 3.00%.
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Further tightening remains likely: All members agreed that higher rates would probably be needed, depending on the economic outlook.
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Inflation remains a concern: Annual CPI eased to 3.7%, but is projected to rise to 4.4% in Q4, largely because of fuel costs. Core inflation and broader price pressures remain elevated.
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An uneven recovery supports patience: Exports remain strong, but household spending and domestic demand are subdued.
Hourly chart: Buyers defend support, but resistance looms
The NZDUSD fell sharply after the announcement, dropping from around 0.5682 to 0.55773, before rebounding to 0.56181.
On the hourly chart above, the decline briefly undercut the 0.55791 swing level, defined by lows on October 5, 8 and 13. However, sellers could not sustain the break, and the October 14 cycle low at 0.55644 remained intact. That failed break below 0.55791 helped give buyers a foothold and prompted the bounce.
The rebound, however, has more work to do before buyers can claim greater control. The 0.56256–0.56330 swing area is the next key upside hurdle. A move above that area—and the ability to stay above it—would give buyers additional confidence.
Staying below keeps sellers in control, with 0.55791–0.55773 and then 0.55644 remaining the downside targets.
Five-minute chart: Four rallies stall at the same retracement level
The five-minute chart reinforces the bearish bias.
After a sharp trend move lower, I like to measure how much of the decline the market can retrace. The 38.2%–50% correction zone provides a useful barometer: if buyers cannot push the price above that zone, the rebound remains limited and sellers retain control.
So far, four separate rebound attempts have found sellers near the 38.2% retracement at 0.56181. That repeated resistance gives traders a clearly defined level to watch—and a close risk level for sellers leaning against it.
Above that, the 50% midpoint at 0.56308 falls inside the hourly swing area at 0.56256–0.56330, reinforcing the importance of that resistance zone.
Buyers vs. sellers: What would shift control?
For now, buyers have defended the lows, but sellers continue to cap the recovery.
A break above 0.56181 would be the first step toward easing the immediate downside pressure. Getting above—and staying above—the 0.56256–0.56330 resistance area would provide stronger evidence that buyers are taking back control.
Until then, the bounce remains a correction within the sharp move lower. A move back below 0.55791–0.55773 would put the 0.55644 cycle low back in focus.
Video: Key NZDUSD levels and trading risks
In the video above, I walk through the hourly and five-minute charts, highlighting the levels that define risk and what buyers need to do to shift the technical bias.
This article was written by Greg Michalowski at investinglive.com.