The Reserve Bank of New Zealand hiked rates by a historic 75 basis points earlier in the week, bringing the official cash rate (OCR) to 4.25%. This marks an acceleration of its tightening cycle after a series of 0.5% moves, but still expects further increases, now projecting the OCR to peak at 5.5%. 
This action is in contrast with some other major central banks, who have already moderated their pace or looking to do so. The Reserve Bank of Australia has downshifted, since it raised rates by a miniscule 0.25% earlier in the month, the second straight adjustment of this size. 
The US Fed may be running its most aggressive tightening cycle in decades, but it is looking to slowdown, as recent commentary and this week's minutes showed. According to these accounts of the last policy meeting, "a substantial majority of participants" believes that a moderation in the pace of rate hikes "would likely soon be appropriate". 
This expectation for a moderation by the Fed has led to a USDOLLAR sell-off in November, allowing the Kiwi to extend its recent rally against the greenback, into the second straight month. Along with the boost from the RBNZ's acceleration, it heads towards the conclusion of its sixth straight profitable week - the longest streak in two years.
It covers half of this year's losses and breaks above the 200days EMA, which opens the door for further advance towards 0.6452-69. However, it does not yet inspire confidence for such move and a pullback may be required for that.
The impressive recovery though, has created overbought conditions, as shown by the Relative Strength Index (RSI). Furthermore, broader sentiment is fragile, as Covid-19 cases are high in China, which is a key trading partner of New Zealand.
These factors can contain the rise of NZD/USD and push it towards 0.6100-0.6093, but a strong catalyst would be needed for daily closes below critical 0.5990-80, that would halt upside momentum.
Senior Market Specialist
Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.
With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.
Retrieved 25 Nov 2022 https://www.rba.gov.au/media-releases/2022/mr-22-36.html
Retrieved 28 Jan 2023 https://www.federalreserve.gov/monetarypolicy/fomcminutes20221102.htm