The NZD/USD pair maintained its offered tone through mid-European session, albeit has managed to hold above dovish RBNZ-led swing low touched during Asian session.
Currently trading around 0.6850 level, having posted a session low level of 0.6818, the pair came under intense selling pressure on Thursday and tumbled to its lowest level since early June 2016 after RBNZ policy statement revealed a slightly dovish tilt.
The central bank downplayed recent up-tick in inflationary pressure and indicated to hold its current monetary policy stance for the rest of the year, and probably until 2020. The central bank also remained concerned over weaker domestic growth in the second half of 2016. Lack of hawkish comments and unchanged forward guidance disappointed the markets and weighed heavily on the major.
• RBNZ: Still not convinced about reflation – HSBC
The selling pressure, however, seems to have abated amid subdued US Dollar price-action led by sliding US treasury bond yields, eventually was seen lending some support to higher-yielding currencies - like the Kiwi.
Moving ahead, focus shift to the US PPI and weekly jobless claims data, due for release later during early NA session, followed by Fedspeak and would be looked upon for some fresh impetus.
Technical levels to watch
Any further recovery is likely to confront immediate resistance near 0.6865 level, above which the pair is likely to aim towards reclaiming the 0.6900 handle and head towards testing its next important hurdle near 0.6935 area.
On the flip side, sustained weakness below multi-month lows support near 0.6820-15 region is likely to accelerate the slide towards 0.6780 support before the pair eventually slides further towards the 0.6700 handle.
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