NZD/USD: range bound with a bearish bias, 0.6960 eyed
|Currently, NZD/USD is trading at 0.7013, up 0.03% on the day, having posted a daily high at 0.7017 and low at 0.7009.
NZD/USD has been consolidating on the 0.70 handle, ranging between 0.7005 and 0.7045 after a pullback from the 0.7090 area on the 21st March where lows of 0.6999 were hit. Analysts at Westpac explained that there is potential for higher to the 0.7150-0.7300 area during the month ahead, as USD longs are pared.
For markets overnight, the US dollar was striking back with a risk-on display on Wall Street and rising yields as markets continue to factor in rate hikes from the Fed this year. US 10yr treasury yields moved higher and rallied off 2.36% to 2.42%.
Forex today: improved risk sentiment across the board, GBP/USD worst performer
Data wise, the Consumer Board Consumer Confidence Index surged higher to 125.6 and beating expectations of an 114 print. The Richmond Fed manufacturing survey was also strong, rising 17 to 22 vs the 15 expected. In respect to Fed speakers, Chicago's Fed President Charles Evans and Dallas' Federal Reserve Bank President Robert Kaplan both advocated for further rate hikes this year. Yellen displayed a cautionary tone around the jobs sector noting persistently high unemployment.
"Further out, the Fed’s tightening cycle plus US fiscal expansion should maintain upside pressure on US interest rates and the US dollar, pushing NZD/USD down towards 0.6900," argued analysts at Westpac, adding, "Weaker dairy prices plus the RBNZ’s emphatic reminders it is on hold for a long time should also weigh. (21 Mar)."
NZD/USD levels
NZD/USD's key first support is at 0.7005 while trading below the 200 smoothed sma at 0.7019. The next downside levels are 0.6950/60 and key supporting areas guarding 0.6880 and March lows. On the flipside, a drive higher through 0.7040 targets the double-bottom of potential resistance at 0.7130 on the 4hr chart in mid-Feb and late Fed business. 0.7245 comes as the late Jan/early Feb support and double top resistance Feb 16th and 23rd.
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