NZD/USD rises back to test weekly highs ahead of RBNZ

• US Dollar falls across the board amid risk appetite.
• NZD/USD keeps facing strong resistance around 0.5750.
• RBNZ to decide on monetary policy on Wednesday.

The NZD/USD rose during the American session boosted by a broad-based decline of the US dollar across the board. The pair climbed to 0.5747 and it is hovering around 0.5735, up less than 20 pips for the day, with a bullish momentum.

The kiwi needs to make a clear break above 0.5750 in order to open the doors to further gains. The next barrier is seen at 0.5805. On the flip side, the immediate support might be seen at 0.5725 while the key intraday level is 0.5680, the daily low. A break under 0.5680 would leave the kiwi vulnerable.

The rally of the NZD/USD continues to be driven by a decline of the US dollar across the board. The DXY is falling again on Tuesday, about to post the fourth decline out of the last five days. It is trading at 110.48, the lowest level since September 22.

The improvement in market sentiment and lower US yields weakened the demand for the greenback during the last session. US employment reports due on Wednesday (ADP) and Friday (NFP) will be watched closely.

Next stop: RBNZ

On Tuesday the Reserve Bank of Australia surprised market participants with a rate hike of 25 basis points instead of the 50 bps expected. “Quite clearly, today's RBA decision may stoke speculation that other central banks will begin slowing the pace of hikes”, wrote analysts at TD Securities.  

The Reserve Bank of New Zealand will announce its decision on Wednesday (01:00 GMT). A 50 basis points rate hike to 3.50% is expected. It would be the fifth consecutive hike in a row. Any changes to the statement could have a large impact on the kiwi.

Technical levels