The Reserve Bank of New Zealand (RBNZ) is widely expected to hike its key lending rate to 3.25% from 3.0% at the policy review on Thursday, leading to a further strengthening of the Kiwi dollar.
The New Zealand dollar has been rallying against its major counterparts over the last two days and its further move will depend on the tone of the policy statement.
The central bank's inflation expectations came in at 2.4% y/y for Q2, as per the data on 22 May, from 2.3% in the previous month. Tuesday's data showed electronic card retail sales rising more than expected in May.
In NZD/USD, Wednesday's break above the critical 0.8546 resistance, which was also lying on the 38.2% Fibonacci retracement of the 6 May to 4 June downtrend, has likely opened doors to 0.8592, endorsed by the 50% retracement and 50-day moving average, and then 0.8638, the 61.8% retracement.
Further up, the pair will have only light resistance until 0.8781, a breach of which can take it to 0.8844, the record high hit in August 2011.
On the downside, a break of 0.8490 will resume the downtrend since 6 May and then the next target would be 0.8400.
AUD/NZD has main downside levels at 1.0950 ahead of 1.0915 but only a break of 1.0845, on the 38.2% Fibonacci retracement of the 13 March-4 June uptrend and the 50% moving average. The main resistance is 1.1044 ahead of 1.1115.