NZD/USD: bears testing bull's commitments at the key 0.7000 level

Currently, NZD/USD is trading at 0.7009, down -0.02% on the day, having posted a daily high at 0.7013 and low at 0.7006.

NZD/USD has been better offered on the back of the greenback picking up a bid with the Mnuchin Bloomberg interview where he expressed the tax reforms are on the way. 

Analysts at Nomura explained that NZD fundamentals have turned more positive though, with dairy prices rebounding, domestic and global growth momentum firm and New Zealand’s CPI accelerating. "Against this backdrop, the Reserve Bank of New Zealand (RBNZ) should continue to turn more positive. This should keep the pricing for a RBNZ rate hike in 2018 firmly in place," they explained.

The analysts also explained that given the negative skew of NZD positioning, they think NZD is the most likely currency in the commodity bloc to benefit from an improved risk backdrop. "The first round of the French presidential election (23 April) is the next major global event. On a relative basis, the shift in commodity prices and yield differentials should keep AUD/NZD under pressure. We would fade any near-term bounces up to the 50-day moving average (1.0805)."

NZD/USD levels

On the downside, 0.7000 psychological level guards 0.6933/50 and 13th March resistance come as first support. A break of the 0.69 handle opens up the 0.6885 mark as being the recent lows guarding 0.6675 as the 29th May 2016 on a break of the 0.67 handle. On a correction, the 17th April highs of 0.7035 guard 0.7060/70 around the 200-d ema (0.7068). There is a double bottom at 0.7130 as the mid-Feb lows.