Fundamental Outlook: NZD/USD is expected to trade with a bearish bias after hitting a five-year low of 0.7011 this morning. Kiwi sentient is hurt after the Reserve Bank of New Zealand reduced the Official Cash Rate by 25 basis points to 3.25%. The bank's officials said more easing may be appropriate and the exchange rate remains overvalued despite having declined from its recent peak in April. NZD/USD is also weighed by kiwi sales on buoyant AUD/NZD cross, kiwi sales on soft NZD/JPY cross amid bullish yen sentiment, and lower dairy prices. But NZD/USD losses are tempered by positive investor risk sentiment and NZD-USD interest differential.
Technical comment: The daily chart is negative-biased as the MACD and stochastic are turning bearish, five-day moving average is below declining 15-day moving average and is turning downward.
The pair is trading below its pivot point. It is likely to trade in a lower range as long as it remains below the pivot point. Short positions are recommended with the first target at 0.6980. A break of that target will move the pair further downwards to 0.6950. The pivot point stands at 0.7080. In case the price moves in the opposite direction and bounces back from the support level, it will move above its pivot point. It is likely to move further to the upside. According to that scenario, long positions are recommended with the first target at 0.7130 and the second target at 0.7170.
Resistance levels: 0.7130 0.7170 0.7210
Support levels: 0.6980 0.6950 0.69
The material has been provided by InstaForex Company – www.instaforex.com