NZD/USD: awaits new catalyst with a downside bias towards critical 0.6885 level

Currently, NZD/USD is trading at 0.6976, up 0.06% on the day, having posted a daily high at 0.6979 and low at 0.6972.

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While the change in GDT Price Index came in at 1.6%, lower than the previous 1.7%, NZD/USD has been stuck in a tight 10 pip sideways range between 0.6970 and 0.6980 during the US session. Investors are sitting on their hands and will await further developments from forthcoming key events this week. We have the FOMC minutes tomorrow, US President Trump meeting with his Chinese counterpart Xi Jinping on Thursday and indeed the nonfarm payrolls at the end of the week.

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NZD/USD 1-3 month:  

Analysts at Westpac's medium term look has the potential for higher to the 0.7150-0.7300 area during the month ahead, as USD longs are pared. "Further out, the Fed’s tightening cycle plus US fiscal expansion should maintain upside pressure on US interest rates and the US dollar, pushing NZD/USD down towards 0.6900. Weaker dairy prices plus the RBNZ’s emphatic reminders it is on hold for a long time should also weigh." 

NZD/USD levels

On the downside, the bear's break of 0.7000 wasn't particularly convincing but all the same significant. The 0.6970 level has held so far ahead of 0.6950 and 13th March resistance. A break of the 0.69 handle looks to the 0.6885 mark as being the recent lows guarding 0.6675 as the 29th May 2016 on a break of the 0.67 handle.  On the upside, the 20-d sma at 0.7011 and 3rd April high of 0.7022 guards 0.7080 and the 200-d ema. There is a double bottom at 0.7130 as the mid-Feb lows.