NZD/USD reverses a dip to 0.6820, dovish RBNZ still weighs

Dhwani Mehta FXStreet

Having witnessed a sharp sell-off to near 0.6820 region on the RBNZ policy decision in opening trades, the NZD/USD pair is now seen consolidation the drop heading towards early Asia.

Over the last hours, the spot is seen making minor-recovery attempts from multi-month troughs, in the wake of a risk-on rally in Asian equities and resurgent demand for oil, after bullish EIA inventory report.

The Kiwi plunged to the lowest levels since June 2016, after the RBNZ turned out slightly dovish on its policy path, as it sees inflation and global political uncertainty as key headwinds. RBNZ left the cash rate unchanged at record lows of 1.75%.

Moreover, dovish comments from RBNZ governor Wheeler, assistant governor McDermott and Spencer also added to the selling spiral in the major. The latest policy outcome from RBNZ re-enforces divergent monetary policy outlooks between the Fed and RBNZ.

Attention now turns towards the US PPI and jobless claims data for fresh impetus on the Kiwi. Meanwhile, Fedspeaks will be also closely eyed.

NZD/USD Levels to consider

To the upside, the next resistance is located at 0.6897/99 (5 & 10-DMA), above which it could extend gains to 0.6928 (May 9 high) and from there to 0.6948/50 (May 8 high/ psychological levels). To the downside immediate support might be located at 0.6818 (multi-month lows), and from there to 0.6800 (key support), below 0.6756 (June 2016 lows) would be tested.

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

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