The Reserve Bank of New Zealand (RBNZ) announced today that it is lowering interest rates from 8.25% to 8.00%. This announcement sent the NZD/USD dow to its lowest levels since the beginning of the year.
Many traders and analysts expect that this interest-rate cut is just the first of many from the RBNZ to try to stimulate a slumping New Zealand economy. If the RBNZ does indeed continue to cut interest rates throughout this year and into 2009, it will most definitely have a bearish effect on the value of the New Zealand dollar (NZD).
In conjunction with this bearish fundamental outlook for the NZD, as I look at the weekly chart of the NZD/USD, it appears that a longer-term head-and-shoulders top pattern may be forming.
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