RBNZ Hiked Again. So Why Is NZD/JPY Falling More Than 1%?

The NZD/JPY currency cross dropped by more than 1% following the Reserve Bank of New Zealand's decision to raise the Official Cash Rate by 25 basis points to 2.75%. Despite the rate hike, the New Zealand Dollar weakened because the central bank delivered gradual forward guidance, projecting the OCR to reach only 3.2% by December 2027, alongside a 4-2 committee split on inflation risks that disappointed market expectations for a more aggressive tightening cycle. Simultaneously, the Japanese Yen received strong support from hawkish Bank of Japan rhetoric and external pressure from US Treasury Secretary Scott Bessent urging further Japanese rate hikes. BoJ board member Hajime Takata emphasized a monetary regime shift away from fixed tightening intervals, increasing the likelihood of faster BoJ rate normalization. Escalating Middle East tensions further weighed on the pair as crude oil surged toward $102 per barrel, damaging risk appetite and triggering an unwinding of Yen-funded carry trades. From a technical perspective, NZD/JPY broke below its 55-day exponential moving average at 93.78, turning near-term attention toward key support levels at 91.02 and 89.44.