NZD/USD struggles below 0.6600 mark, lowest since March 2016

Haresh Menghani FXStreet

• Dovish RBNZ-led selling pressure remains unabated.
• Resurgent USD demand adds to the bearish pressure.
• Traders now look to the US CPI print for fresh impetus.

The NZD/USD pair weakened farther below the 0.6600 handle and dropped to fresh 2-1/2 year lows in the last hour, albeit recovered few pips thereafter.

The New Zealand Dollar came under some intense selling pressure on Thursday in reaction to RBNZ's more accommodative policy stance, now forecasts the first hike in the third quarter of 2020 - a full year later than previously projected.

This coupled with resurgent US Dollar demand, supported by hawkish comments from Chicago Fed President Charles Evans, further contributed towards aggravating the bearish pressure surrounding the major.

Evans, a known dove, said that the US economy is performing very well and continued growth has cleared the way for one or two more interest rate hikes in 2018.

The USD upsurge extended through the Asian session on Friday, lifting the key US Dollar Index to over 13-month tops, and kept exerting downward pressure, dragging the pair to its lowest level since March 2016.

The selling bias now seems to have receded a bit, at least for the time being, as investors now look forward to the latest US consumer inflation figures for some fresh impetus on the last trading day of the week.

Technical levels to watch

A follow-through weakness below the 0.6570-65 horizontal zone is likely to get extended towards the key 0.6500 psychological mark before the pair eventually drops to 0.6445-40 support area. On the flip side, 0.6620 area (session high) now seems to act as an immediate hurdle and is followed by resistance near the 0.6655-60 region, above which the pair is likely to aim towards reclaiming the 0.6700 round figure mark.

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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