It falls below 0.6100 on RBNZ rate cut of 50 bps

• NZD/USD slips below 0.6100 as the RBNZ cut its OCR further by 50bps to 4.75%.
• The RBNZ was expected to cut interest rates significantly amid a weak growth outlook.
• Investors await the FOMC minutes for fresh clues on the interest rate outlook.

The NZD/USD pair is experiencing intense selling and is breaking below the round level support of 0.6100 in the North American session on Wednesday. The Kiwi pair tumbles as the Reserve Bank of New Zealand (RBNZ) cut its official cash rate (OCR) by 50 basis points (bps) to 4.75%.

The RBNZ was expected to produce a larger than usual rate cut due to subdued labor market conditions and subdued growth. Market participants expect the RBNZ to cut interest rates at a similar pace again in November.

Meanwhile, gloomy market sentiment due to risks in the Middle East also dampened the appeal of risk-sensitive assets. The US Dollar Index (DXY), which tracks the greenback against six major currencies, is climbing to near 102.70.

The US dollar strengthened as traders dismissed the scenario of the Federal Reserve (Fed) cutting interest rates again by 50 bps in November. The Fed kicked off the policy easing cycle with a sizeable 50 bps cut in September. Meanwhile, investors await the Federal Open Market Committee’s (FOMC) minutes for the September meeting, which will be released at 18:00 GMT.

NZD/USD is weakening after falling below the horizontal support drawn from the September 11 low of 0.6100 on a daily timeframe. The overall trend of the Kiwi pair turned bearish as it formed a lower swing. The asset is also trading below its 50-day exponential moving average (EMA), which is trading around 0.6173.

The 14-day Relative Strength Index (RSI) is breaking below 40.00, suggesting a bearish impulse has been triggered.

More downside is very likely towards the psychological support of 0.6000 and the August 15 low of 0.5974.

On the other hand, a reversal move above the October 8 high of 0.6146 will lead the asset to the 50-day EMA at 0.6173 and the October 4 high near 0.6220.

NZD/USD Daily Chart