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NZD/USD Surges on the RBNZ's Neutral Tone

Whoa, the 4H candle to start the 3/12 session was kind of strong. It reminds me of the bullish push that began in February from the lows on the year at 0.7176 up to about 0.76.

NZD/USD 4H Chart 3/12
(click to enlarge)

In March, it has retreated quickly and broke below 0.72 during the 3/11 session. As we begin the 3/12 session, the Reserve Bank of New Zealand (RBNZ) concluded its monetary policy meeting and decided to hold its official cash rate (OCR) at 3.50%. This was mostly expected, but some market watchers have been anticipating a rate cut recently, or at least a dovish tone. RBNZ governor Graeme Wheeler maintained a neutral tone, and the NZD/USD rallied sharply, engulfing the decline from the previous session. 

In the 4H chart, we can also see price threatening a falling speedline from last week. There will likely be resistance around 0.7330-0.7350, as NZD/USD tests a previous consolidation support. If it holds here, the market will continue to look bearish, especially if the RSI also holds under 60. 

However, for the market to turn bullish again, it might have to push above the 0.74-0.75 hurdle. This area involves a previous support/resistance area and the cluster of 200-, 100-, and 50-period SMAs. If the RSI also pushes above 70, we should expect a bullish correction at least to 0.76 with risk of pushing towards the next common highs around 0.7850.

NZD/USD Daily Chart (3/12)
(click to enlarge)

Let's see what happens during the 3/12 session. In the daily chart, a bullish candle that closes above 0.7350 would complete a 3-candle reversal combination. Then, we should first respect the 0.74-0.75 area as resistance since the prevailing downtrend is bearish. Just be prepared for another bull run if price does breach this area.