NZD/USD steadies below 0.6900 following RBNZ-inspired rally

• NZD/USD rose sharply during Asian session on Wednesday.
• RBNZ left its policy rate unchanged at 0.25% as expected.
• US Dollar Index clings to gains above 93.00.

The NZD/USD pair gained traction in the early trading hours of the Asian session on Wednesday and touched its highest level since March 2019 at 0.6904. With the market action turning subdued in the second half of the day, the pair started to consolidate its gains and was last seen trading at 0.6878, where it was up 0.75% on a daily basis.

RBNZ policy outlook lifts NZD

As expected, the Reserve Bank of New Zealand (RBNZ) left its policy rate unchanged at 0.25%. In its Monetary Policy Statement, the RBNZ reiterated its willingness to provide additional monetary stimulus to the economy in order to meet its consumer price inflation and employment remit.

During the press conference, however, RBNZ Governor Adrian Orr noted that they intend to keep the policy rate until March and helped the kiwi gather strength against its peers. 

Commenting on the RBNZ statement, “the Board acknowledged data has proved more resilient than assumed. Further, key forecasts were lifted, making it harder to justify a pressing need for a negative OCR,” said TD Securities analysts.

On the other hand, the greenback preserved its strength in the absence of significant fundamental drivers on Wednesday and limited the pair's upside. At the moment, the US Dollar Index is at its highest level since November 5th at 93.15, gaining 0.48% on a daily basis.

The trading conditions are likely to remain thin in the remainder of the day due to the Veterans Day holiday in the US.

Technical levels to watch for