NZD/USD Appears Bearish amid Forecast of a Reduced Cash Rate by the RBNZ

New Zealand – Official Cash Rate

On Wednesday, at GMT 8:00 p.m., the Reserve Bank of New Zealand will release the Official Cash Rate, which is the interest rate that banks in New Zealand use to lend funds held at the central bank.

Binary options traders consider the official cash rate to be the most important factor of the valuation of the New Zealand Dollar against other currencies. In fact, most of the other fundamental indicators are considered just to predict future interest rate.

Last month, the RBNZ left the official cash rate at 2.75% and the forecast for this month is currently set at a slightly lower rate of 2.50%.

United States – Unemployment Claims

On Thursday, at GMT 1:30 p.m., the US Department of Labor will release the unemployment claims figure, which measures the changes in the number of people who claimed for unemployment insurance over the last week.

Binary options investors consider the unemployment claims data to be one of the most important fundamental indicators of the US job market. This is primarily because unemployment and consumer spending has direct correlation and an increasing number of unemployment claims indicate lower consumer spending in the economy, which makes up the bulk of the economic activity in the United States.

Last week, the US unemployment claims figure came out at 269,000 and the forecast for this week is currently set at a slightly lower figure, at 266,000.

Trade Recommendation for the NZD/USD

NZDUSDDaily

Since forming a bullish pin bar on September 23, the NZD/USD price has remained in an uptrend and formed a respectable uptrend line in the process. Last week, the NZD/USD resumed the uptrend but found strong resistance around the important pivot zone at 0.6225.

Although the price closed above this level, a lack of additional bullish momentum translated into a range bound price action and the NZD/USD formed an inside bar. Currently, the price is trading within the inside bar.

As the RBNZ is likely to reduce the official cash rate by 0.25% to 2.50% this week, the fundamental outlook for the NZD/USD would remain bearish. If the price penetrates below the low of the inside bar, it would likely continue the downward move towards the uptrend line.

Under the present circumstances, it would be recommended that traders consider placing a PUT order for the NZD/USD with their binary options brokers, once the price closes below the low of the inside bar, which is at 0.6635.

Recommended Broker: Porter Finance

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