NZD/USD bulls eye 1st March low at 0.7098, greenback in technical bearish correction

NZD/USD is currently trading at 0.7018 with a high of 0.7036 and a low of 0.7001.

The bird started off in the post-G20 weekend on the back-foot at the open, dropping to test the early bull's commitments at the 0.7000/03 level. However, the Kiwi soon picked up a quick bid from the first bargain hunters of the week and maintains the 0.70 handle.

The US dollar remains in a technical correction to the downside, as explained by analysts at Brown Brothers Harriman. Given the concerns over the labor market's background disappointments in not only wages but the quality of the jobs and demographics, the dollar is on the backfoot. With continued concerns about global growth, let alone that of the US's, markets are no longer pricing in immediate additional Fed hikes; Fed fund futures continued to price around a 60% chance of the next hike occurring in June.

Kashkari the lone dissenter

"FOMC dovish dissenter Kashkari noted that the Fed still remains below its inflation target, while labor slack remains and the Fed shouldn't treat the 2% inflation target a ceiling," explained analysts at Westpac, further adding, "In addition, he thought the Fed should first publish a plan on trimming the balance sheet, which could trigger tighter financial conditions, resuming hikes only once it sees the market reaction to the plan."

NZD/USD 1-3 month:  

However, further put, analysts at Westpac argued that 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 to 0.6900 or lower. "Additional, and more recent, negative factors have been weaker dairy prices plus the RBNZ’s emphatic reminders it is on hold for a long time."

NZD/USD levels

The 6th March high is located at 0.7048. A further push from the bulls would target the 1st March low of 0.7098 before a break onto the 0.71 handle. Once on the 0.71 handle, there is a double bottom of potential resistance at 0.7130 on the 4hr chart in mid-Feb and late Fed business. The key upside target sits at 0.7245 as the late Jan/early Feb support and double top resistance Feb 16th and 23rd. To the downside, 0.6950/60 is still the key support area guarding 0.6880 and March lows.