EURNZD Euro vs New Zealand Dollar

The New Zealand dollar extended its early strength against its major rivals in European deals on Wednesday, as traders await the monetary policy announcements by the Federal Reserve today and the Reserve Bank of New Zealand tomorrow.

The Fed will conclude its 2-day meeting at 2 pm ET. Markets expect no change to the fed funds rate, but are hoping for signals about when the first rate hike may come. Some analysts predict tightening in April, while others think the Fed will hold off until June or even later.

At the December news conference, Fed Chair Janet Yellen told reporters that the first increase won't happen for at least couple of meetings or before April.

The RBNZ is expected to keep its official cash rate unchanged at 3.5 percent.

Falling commodity prices, especially the oil, and soft global growth are weighing on inflation outlook in New Zealand. Although the central bank indicated about further increases in the official rate in its previous statement, economists are expecting a prolonged period of stability, given weak inflationary outlook.

Extending early rise, the kiwi climbed to 5-day highs of 0.7493 against the greenback and 88.32 against the yen. At Tuesday's close, the kiwi was valued at 0.7445 against the greenback and 87.78 against the yen. The next possible resistance for the kiwi is seen around 0.775 against the greenback and 90.00 against the yen.

The kiwi advanced to 1.5134 against the euro, after falling to a 6-day low of 1.5291 at 7:00 pm ET. The kiwi is likely to find resistance around the 1.50 mark. The pair ended yesterday's trading at 1.5257.

German consumer confidence for February improved strongly to a 13-year high, survey data from GfK showed.

The forward-looking consumer confidence index rose to 9.3 in February from 9 in January. This was the highest value since November 2001, when the score was at 9.6.

The kiwi rose back to 1.0622 against the aussie, few pips away from early 2-day high of 1.0614. This may be compared to an early 6-day low of 1.0746. If the kiwi extends rally, 1.05 is possibly seen as its next resistance level. At yesterday's close, the pair was quoted at 1.0642.

Consumer prices in Australia gained just 1.7 percent on year in the fourth quarter of 2014, the data from Australian Bureau of Statistics showed.

That was below forecasts for 1.8 percent, and down from 2.3 percent in the third quarter.

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