NZD/USD turns lower after Powell's comments to retest 0.6000 support area
- NZD/USD recovery attempt fails at 0.6050 and the pair pulls back to 0.6000 area.
- The kiwi losses ground after the dovish RBNZ statement and Fed Powell's comments.
- The New Zealand Dollar might drop towards 0.5700 over the next months – Rabobank.
The New Zealand dollar is losing ground on Wednesday, weighed by a dovish statement by the Royal Bank of New Zealand and US dollar strength after Fed Powell’s speech. The feeble recovery attempt witnessed during the European trading session has been capped at 0.6050, and the pair has pulled back again, returning to levels only a handful of pips above 0.6000.
Kiwi dives on Fed Powell’s comments and dovish RBNZ
The NZD/USD has been weighed by Powell’s comments discarding the possibility of negative interest rates and warning about a sustained recession caused by the Coronavirus pandemic. Powell's speech has strengthened the dollar weakening hurting risk appetite.
Earlier today, the kiwi dropped against its main rivals after the RBNZ suggested the possibility of using additional monetary tools to support economic recovery. The Bank announced a plan to double up its quantitative easing programme and to introduce negative interest rates if needed.
NZD/USD: Risking a dip to 0.5700 - Rabobank
On a bigger picture, the FX analysis team at Rabobank sees the New Zealand dollar vulnerable and warns about a dip to 0.5700: “We see risks of a dip towards NZD/USD 0.57 on a 3 to 6-month view. This assumes an intensification of US/China tensions in the run-up to the US Presidential election and an associated increase about the pace of Chinese growth.”
NZD/USD key levels to watch
Author
Guillermo Alcala
FXStreet
Graduated in Communication Sciences at the Universidad del Pais Vasco and Universiteit van Amsterdam, Guillermo has been working as financial news editor and copywriter in diverse Forex-related firms, like FXStreet and Kantox.
