We were trading at 1.0970 before the RBNZ announcement and now we are trading near the 50-dma at 1.0850. The only possible explanation for such a strong reaction to ‘as expected’ developments is that the market got caught overly long at the wrong levels.
Those waiting in expectation of a relief rally will need to lower their expectations now, with 1.0925ish likely to cap rallies. A clean break below 1.0850 will put the short-term focus on pivotal levels near 1.0750.
At least we should continue to get some short-term volatility in this cross.