NZD/USD: RBNZ aftermath and derivatives factoring in more cuts

NZD/USD is currently consolidating the volatility that we saw due to the RBNZ interest rate cut overnight. 

"Not only was the rate cut widely anticipated, but in recent days, there was talk of the chances of a 50 bp rate cut,"  analysts at Brown Brothers Harriman explained. 

"The derivatives market appeared to discount about a 20% chance of a 50 bp move, which Governor Wheeler indicated he did not seriously consider. The RBNZ's path for the 90-day bill implies a trough in the official cash rate of 1.50-1.75% rather than 2% previously," explained the analysts further.

How volatile has NZD/USD been?

Hourly 2-Standard Deviation Volatility Bandwidth is currently 73 pips, and has been shrinking, while the ATR (14) is currently 23 pips. Daily 2-Standard Deviation Volatility Bandwidth is at 301 pips and shrinking.

The average movement for the current hour has been for 23 pips per hour, over the last four weeks. Meanwhile, 11:00-12:00 GMT represented peak for volatility, with an average movement of 25 pips over the same period.

What price levels and patterns have to be considered?

Current price is 0.7212, with resistance ahead at 0.7227 (Weekly Classic R1), 0.7244 (Hourly 20 EMA), 0.7261 (Daily Classic R1), 0.7267 (Yesterday's High) and 0.7300 (Monthly High). Next support to the downside can be found at 0.7210 (Daily Classic PP), 0.7204 (Daily Open), 0.7204 (Weekly High), 0.7199 (Daily Low) and 0.7185 (Hourly 200 SMA). Looking at price patterns, we can see a Dark Cloud Cover 4-hour candlestick formation.