NZD/USD making fresh lows, 0.7150 on the cards
|- The Kiwi continues to suffer a lack of confidence, drifting into new lows ahead of Fed rate hike.
- Market sentiment is coiling, and a lack of movement from the RBNZ is widening the policy divergence gap.
The Kiwi slid lower in Tuesday's trading and is still pushing lower, currently pressing past 0.7170 to set a new low heading into the overnight session.
Kiwi softens, Dollar advances ahead of the Fed
The NZD/USD continues to drift to the downside, with Global Dairy Trade results coming in at expectations and failing to provide any support for the NZD in Tuesday's European session, and the USD lifting in anticipation of a Fed rate hike. A 25 basis point increase in the US interest rate to 1.75% is all but priced into the broader markets, and a failure to do so would be a far larger catalyst at this point.
The Reserve Bank of New Zealand (RBNZ) will be out with their own interest rate decision at 10:00 GMT, just following the Fed's 08:30 GMT rate decision, but with the RBNZ expected to stand pat on interest rates well into 2019 and possibly even 2020, nobody expects movement from the RBNZ. The RBNZ's acting Governor, Grant Spencer, is on his way out the door this month, and an unwillingness to rock the boat in the face of 'cautiously optimistic' rhetoric from the RBNZ means rates won't be moving anytime soon as the new Governor, Adrian Orr is expected to maintain the RBNZ's current policy and targets mandate.
NZD/USD levels to consider
As FXStreet's own Falvio Tosti stated earlier today, "The NZD/USD is testing its 200-period simple moving average and the 38.2% Fibonacci retracement from the November 2017-January 2018 bull run and trading below the 0.7200 level. A close below 1.7180 would likely open the gates to further losses with support seen close to the 0.7100 figure, the 38.2% Fibonacci retracement and then at the 0.7025 level, the 61.8% Fibonacci retracement. Resistance is seen at 0.7275, 23.6% Fibonacci retracement followed by the 0.7350 cyclical high."
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