NZD/USD: Subdued Awaiting RBNZ/FOMC

NZD/USD: Subdued Awaiting RBNZ/FOMC

25 April 2016, 05:49
Roberto Jacobs
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NZD/USD: Subdued Awaiting RBNZ/FOMC

NZD/USD had been a one way street this month until the support of the ascending channel was broken at the end of last week ahead of both the RBNZ and FOMC this week.

NZD/USD had otherwise been well supported as it targets 0.7175 being the Feb 2015 low) and has been doing so with the recent NZ economic data that has been better than expected in both the housing market and CPI that had been weakening the case for an April (vs June) OCR cut especially considering the recent surprise cut last meeting around.

The FOMC is not expected to favour a hike this month, but instead, markets will be looking to key data points as a gauge as to when to expect the Fed's tightening cycle to continue this year, because while they continue to hold, we are seeing sharp declines in the US dollar aiding the commodity sector and related currencies to recover.

Preview of the week ahead in the U.S. - Nomura

NZD/USD levels

With the support giving out at 0.6950, the ascending channel has come into jeopardy and the break of the 20 dma last week at 0.6881 opens the way to 7th April lows at 0.6768 and the 50 dma. To the upside, the channel holds 0.6900 as a psychological target that if breached, would buy some time for the bulls in a continuation of the 19th Jan rally and major reversal that recently broke the key resistance of the double top earlier in the year at 0.6895.


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