Currently, NZD/USD is trading at 0.7055, up 0.01% on the day, having posted a daily high at 0.7058 and low at 0.7052.
NZD/USD depends on the greenback and the market's appetite to continue selling in the absence of any further catalysts. The FOMC has been digested and thus the markets are consolidating the dollar's weakness with the DXY holding up at the 100.00 level so far.
A break of the 100.00 level could support the bird extending gains to 0.7150 this week, especially should the RBNZ deliver a less than dovish hold wait and see policy this week in the bank's OCR Review on Thursday. Markets fully expect the RBNZ to repeat its long-time-on hold message, but there’s a risk of a slight dovish shift in tone due to weaker dairy prices, subdued housing, and slower economic growth. As a prelude to the RBNZ, the NZIER shadow board stated that the RBNZ should maintain interest rates at 1.75% with a tightening bias.
Meanwhile, the data today delivered the NZ arrivals m/m 1.9% while net migration arrived 6000 vs the previous 6,500. Not a market mover. However, tonight, the GDT dairy auction is a market mover and is priced by futures to show a WMP price fall of 5%, potentially weighing heavily on the bird.
The 6th March high is located at 0.7048 and has acted as a support to the bird in early Asia. The market high overnight fell short of the next key target as 0.7098 before a break onto the 0.71 handle. The overnight high was 0.7073 at the end of Asia trading.
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.
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