The price chart of the NZD/USD currency pair was among the most watched in Wednesday's trade yesterday as the market focused on the results of the Reserve Bank of New Zealand's (RBNZ) latest monetary policy meeting.
As expected, the central bank kept interest rates high at 5.50% for the May meeting.
The New Zealand dollar surged after the interest rate decision was announced, but the currency fell again.
This is due to the dovish tone in the follow-up statement delivered by RBNZ governor Adrian Orr in which the central bank is said to be ready to implement policy easing even though inflation has not yet reached the 2% target.
This RBNZ approach is seen as more clear and bold than the Federal Reserve (Fed) which remains vigilant and 'pulls the strings' for their monetary policy changes.
On the NZD/USD chart, the price has shown a surge in the Asian session yesterday reaching the level of 0.61500 which is the latest record high for the price in the 10-week trading period.
However, the price did not wait long to continue retreating down until it passed below the 0.61000 level at the end of the New York session.
The decline in prices was also driven by the re-strengthening of the US dollar after the reaction to the minutes of the scrutinized FOMC meeting which remained hawkish in tone.
Continuing trading in the Asian session this morning (Thursday), the price managed to climb back up to around 0.61200 before slowing at the opening of the European session.
In contrast to the positive rising pattern of last week, the price movement this week is more flat and is beginning to show signs of the risk of a price drop.
If the price continues to rise, the level reached yesterday needs to be overcome before investors are more confident that the price will continue the previous bullish trend.
The target for the next rise is likely to head towards the concentration zone at 0.62000.
On the other hand, if the price drops below the 0.61000 level, it will be an early signal for the price to start a decline.
The 0.60600 level is the closest focus to be tested before the decline extends to lower levels.
