As we head into Wednesday, February 19, 2025, global markets are positioned for heightened volatility following key economic events, including the RBNZ Interest Rate Decision and the release of U.S. FOMC Meeting Minutes. The Reserve Bank of New Zealand (RBNZ) cut interest rates to 3.75% from 4.25%, leading to significant movements in the NZD/USD pair. Meanwhile, the U.S. dollar remains in focus as traders react to housing data, crude oil stock reports, and upcoming jobless claims. The Australian dollar also saw volatility following mixed employment data.
NZD/USD
Technicals in Focus
The NZD/USD pair experienced a sharp decline, reflecting market reaction to the RBNZ’s rate cut. The pair dropped to 0.5700 after reaching a high of 0.5740, indicating bearish sentiment. The MACD indicator shows strong downward momentum, while the Stochastic Oscillator is approaching oversold levels, suggesting a potential short-term corrective bounce. The 14-day RSI remains in bearish territory, reflecting the pair’s continued weakness.
Trading Strategy: Neutral to Sell
- Sell below 0.5700-0.5680 with targets at 0.5650-0.5630 and 0.5600-0.5580, with a stop loss above 0.5725.
- Alternatively, consider buying above 0.5730 with targets at 0.5760-0.5780, with stops below 0.5700.
AUD/USD
Technicals in Focus
The AUD/USD pair exhibited high volatility, initially dropping to 0.6340 before rebounding towards 0.6360. The movement followed weaker-than-expected Australian employment data, which saw employment change decline by -23.7K. On the technical side, MACD is showing mixed signals, indicating market indecision, while the Stochastic Oscillator is in oversold territory, suggesting a potential rebound. The 14-day RSI remains neutral.
Trading Strategy: Neutral to Buy
- Buy above 0.6350-0.6330 with targets at 0.6380-0.6410 and 0.6440-0.6470, with a stop loss below 0.6310.
- Alternatively, consider selling below 0.6310 with targets of 0.6280-0.6250, with stops above 0.6350.
USD/JPY
Technicals in Focus
The USD/JPY pair fluctuated but ultimately settled near 151.71, following a strong rebound from 151.27. The pair’s movements were influenced by U.S. Empire State Manufacturing Index data, which showed a stronger-than-expected reading of 5.7 vs -1.9 forecast, boosting the USD. The MACD remains bullish, while the Stochastic Oscillator is approaching overbought levels, indicating potential resistance. The 14-day RSI is showing signs of consolidation.
Trading Strategy: Neutral to Buy
- Buy above 151.50-151.30 with targets at 151.80-152.00 and 152.30-152.50, with a stop loss below 151.00.
- Alternatively, consider selling below 151.00 with targets of 150.70-150.50, with stops above 151.50.
Market Outlook
Looking ahead, U.S. FOMC Meeting Minutes will be the key event to watch, potentially providing insights into future rate policy. The market will also react to jobless claims, oil inventories, and economic sentiment data from the Eurozone. The RBNZ rate cut continues to weigh on the NZD, while traders monitor AUD/USD for further reaction to Australian employment figures.
Overall, markets remain sensitive to central bank decisions, with potential volatility across major forex pairs.