NZD/USD recovers to 0.69, still down on day
Following a recovery move to 0.6915 ahead of the NA session opening, the NZD/USD pair came under a renewed selling pressure in the early trading hours of the NA session amid a stronger greenback and dropped to 0.6885. After finding a decent support at that level, the pair made a mild recovery to the 0.69 handle and is now trading there, losing 0.12% on the day.
Despite today's fluctuations, the pair remains in its two-week-old trading channel and struggles to find a near-term direction amid a lack of fresh catalysts. The greenback strength seems to be dragging the pair down on Tuesday as the US Dollar Index, which tracks the greenback against a basket of six trade-weighted peers, holds on to its gains above 99. At the moment, the index was up 0.33%, at 99.36.
The next important event for the pair will take place early in the Asian session on Thursday as the RBNZ will be deciding on its monetary policy. Although the RBNZ is not expected to make any policy moves, any upward revision to the inflation forecast could help the pair gain some bullish momentum as it would make the RBNZ more likely to raise rates in the near-future.
- RBNZ to once again leave the OCR at 1.75% with cautious stance - ANZ
- RBNZ: Firmly on hold, but the inflation forecasts are set to rise – HSBC
Technical outlook
With a decisive break above 0.6900 (psychological level) the pair could aim for 0.6975 (50-DMA) and 0.7000 (psychological level). On the downside, supports align at 0.6840 (10-month low/May 4 low), 0.6800 (psychological level) and 0.6715 (May 10 2016 low).
- NZD will likely struggle to gain against the USD - HSBC