While the scrutinized minutes of the FOMC meeting made the US dollar significantly weaker towards the end of the week, it was a different story for the New Zealand dollar which managed to maintain its strength.
The Reserve Bank of New Zealand (RBNZ) has increased interest rates by 75 basis points to a new high of 4.25% at its policy meeting yesterday.
The RBNZ has signaled hawkish monetary policy tightening will continue and there are even expectations for an increase of up to 100 basis points in an effort to lower inflation.
Meanwhile, the policy makers of the Federal Reserve (Fed) have a different tone, where the majority have agreed on the need to slow down aggressive interest rate hikes.
This situation is increasingly giving investors a clear direction on the price movement of the NZD/USD currency pair chart this week with the bullish price pattern expected to continue.
If examined, the price moved horizontally in the last week with support at the 0.61000 zone while the price increase several times got stuck at the 0.62000 barrier level.
Last Tuesday, the price that made an increase from the 0.61000 level initially started to break the Moving Average 50 (MA50) barrier on the 1-hour time frame on the NZD/USD chart, signaling the beginning of a bullish trend.
However, the indicator was further strengthened by the results of the RBNZ meeting which saw the price increase continue until it managed to break through the 0.62000 resistance yesterday.
Despite the slow tempo, prices continued to rise with the latest high in the Asian session this morning reaching 0.62700 as the highest price record in 3 months.
The rise that is expected to continue is seen to target around 0.63500 after the last time the price was at that concentration level was in mid-August.
However, there is no denying that prices also have the potential to experience a drop again if the development of Covid-19 in China which is getting worse and leads to risk-off sentiment can strengthen the US dollar.
The bearish price will test the 0.62000 level before investors assess the price reaction in that zone.
If it breaks lower, the decline will return to last week's focus zone at 0.61000.
