The kiwi dropped sharply in overnight trading after the RBNZ released its third interest rates decision of the year. The bank left rates unchanged at 1.75%, which was expected. Officials also expressed increased worries about the health of the economy. In recent months, the economy of its leading exports markets of Australia and China have showed signs of weakness. Its unemployment rate rose from 4.0% to 4.3% while inflation has continued being subdued. As a result, investors expect that the bank could be forced to lower rates this year.

After dropping in the morning session, the EUR/USD pair rose slightly even after some relatively dovish statements from Mario Draghi. The EUR/GBP pair dropped after the statement. In a conference in Frankfurt, he said that the ECB will be open to extend the duration before it hikes rates. In the March meeting, the bank extended the period from summer this year to December. The ECB joins other central banks like Fed, RBA and RBNZ in sounding dovish as the economy continues to weaken. In the conference, he said:

Our current reaction function is well designed to respond to further delays in inflation convergence. In such a situation, just as we did at our March meeting, we would ensure that monetary policy continues to accompany the economy by adjusting our rate forward guidance to reflect the new inflation outlook.

In the United Kingdom, the Brexit issue continued as the parliament prepared for a number of votes. This week, the MPs took control of the Brexit issue after failing to pass Theresa May’s deal. The MPs will vote on 16 suggestions. The labor proposal will ensure that the UK has a close relationship with the EU with a comprehensive customs union with a UK say. Other proposals include leaving without a deal, another referendum, postponing Article 50, the Malthouse compromise deal, and having the UK join the EFTA and EEA among others.

EUR/GBP

The EUR/GBP pair has been declining since last week. It has declined from a high of 0.8722 and reached a low of 0.8520 today. On the 30-minute chart, the pair is below the 50-day and 25-day moving averages. The RSI has continued to decline, reaching a low of 35 today. It is also below the important support of 0.8530. At this point, as the MPs vote on various proposals, there is a likelihood that the pair will move in either direction.

EUR/USD

The EUR/USD pair reached an intraday low of 1.1247 and then started moving up again. In the four-hour chart, the pair has maintained a significant downward trend. On the chart below, the price is slightly below the 25-day and 50-day moving averages while the RSI is heading lower. The current price is along the 23.6% Fibonacci retracement level. There is a likelihood that the pair will continue to move lower in the next few days.

NZD/USD

The NZD/USD pair continued to decline today after the dovish statement from the RBNZ. It is now trading at the 0.6795 level, which is the lowest it has been since March 11. On the hourly chart, there have been a major divergence in the Bollinger Bands. The price is between the lower and the middle line of the band. The RSI is staying below the oversold level while the volumes indicator is flashing red. The pair could continue the downward momentum.