NZD/USD Drops to Two-Month Low, Eyeing RBNZ Report for Further Direction
The NZD/USD pair dropped to a fresh two-month low level of 0.6716 before retracing few pips to currently trade at 0.6727 level.
The RBNZ's semi-annual Financial Stability Report will take the center stage in determining the pair near-term direction. Market players are looking for clues of an imminent interest rate cut at RBNZ's next policy meeting in June. Should the report turn out to be less dovish than expected, bears might rush to cover their bearish bets, triggering a sharp short-covering rally for the pair.
The pair is currently hovering around 100-day SMA support near 0.6720 level. A follow through selling pressure, leading to a break below 50% Fibonacci retracement level of 0.6347-0.7054 up-move, now seems to pave way for extension of the pair's near-term downward trajectory.
Technical levels to watch
Weakness below 50% Fibonacci retracement level support near 0.6700 handle paves way for a test of 0.6615-0.6600 support zone, marked by 61.8% Fibonacci retracement level.
Alternatively, a move back above 38.2% Fibonacci retracement level resistance near 0.6780 area could initially target 0.6830 a short-term ascending trend-channel support break-point turned resistance and eventually towards 23.6% Fibonacci retracement level resistance near 0.6885-90 region.