NZD/USD eyeing 2016 high after RBNZ played down stimulus bets

NZD/USD is extending overnight gains, trading above 0.7250 levels and on track to test 2016 high after RBNZ Deputy Governor said that further interest rate cuts “could pose financial stability risk”.

RBNZ concerned about property market

RBNZ is concerned about a severe housing correction that would pose real risks to the financial system and broader economy. Deputy Governor Grant Spencer said yesterday a cut in the interest rate could worsen the imbalances in the property market and “could pose financial stability risk”.

The comments sent NZD higher. The bird closed yesterday at 0.7227 and extended gains in Asia to 0.7272 levels. 2016 high stands at 0.7298 (June 24 high).

NZD/USD Technical Levels

The immediate hurdle is noted at 0.7298 (2016 high), above which prices could target 0.7391 (late March 2015 low). A violation there could yield 0.7500 levels (psychological level). On the other hand, a breakdown of support at 0.7241 (July 4 high) would open doors for a slide to 0.7200 (5-DMA) and 0.7145 (10-DMA).