The Reserve Bank of New Zealand (RBNZ) surprised the market when it raised interest rates higher than expected.
Missing expectations for a rise of 25 basis points, the RBNZ instead increased interest rates by 50 basis points to a recent level of 5.25%.
The New Zealand dollar continued to surge following the initial reaction to the meeting's results.
With the employment sector strong and the economy still resilient, the central bank is seen as remaining committed to bringing inflation down to the target level.
The effect of price movements can be seen on the chart of the NZD/USD currency pair which has shown a surge in the Asian session just now.
Compared to the more flat price movement on Tuesday yesterday, the surge that occurred today saw the price reach a high level of around 0.63800.
However, continuing the opening in the European session, the price is seen to start to retreat a bit to level off around 0.63500.
With the US dollar still trading weakly and the RBNZ being seen as more hawkish, prices are seen to be more likely to rise even higher.
The continued increase is seen to be heading towards the next concentration zone at around 0.64000 as well as recording the latest 9-week high.
But if the rise fails to continue, be alert for the potential for the price to fall back down.
The initial decline is seen to be heading around the 0.63000 zone before the signal of a trend change will be noticed by investors.
If it falls lower, the price is seen to fall back to around 0.62000 which was the price support zone in the previous week's trading.
