NZD/USD consolidates post-RBNZ slump to over 2-week lows, around 0.6800 mark
| • RBNZ’s shift to a more dovish stance prompts some aggressive selling on Wednesday.
• The USD remains well supported by a follow-through uptick in the US bond yields.
• Set-up points to an extension of the downfall towards challenging 200-day SMA.
The NZD/USD pair now seems to have entered a bearish consolidation phase and was seen digesting the post-RBNZ slump to over two-week lows.
The New-Zealand Dollar nose-dived after the country's central bank (RBNZ) abandoned its long-standing neutral stance and sounded more dovish, saying that the next move in interest rates would likely be down. The central bank also reiterated that it would keep the current expansionary stance for a considerable period and took yields to fresh all-time lows, which affected negatively on the domestic currency.
Meanwhile, a follow-through uptick in the US Treasury bond yields helped the US Dollar to build on the overnight goodish up-move, offsetting weaker housing market data and consumer confidence index. This coupled with fresh worries over the US-China trade negotiations further collaborated to the pair's sharp intraday over around 120-pips to levels just below the 0.6800 round figure mark.
The pair's inability to register any meaningful recovery clearly points to further near-term downside and hence, a follow-through weakness, possibly towards retesting the very important 200-day SMA, now looks a distinct possibility amid absent relevant market moving economic releases from the US.
Technical levels to watch
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