NZD/USD testing supply around 38.2% Fibo

USD selling gathered pace again in Asia, pushing the NZD/USD into key resistance level of 0.7205 (38.2% of 2014 high – 2015 low).

RBNZ rate cut priced-in

RBNZ is seen cutting rates by 25 basis points to 2.2%. The move is widely priced-in by the markets, thus the NZD managed to etch out strong gains amid broad based USD sell-off. Moreover, markets have a tough time believing the Fed would hike rates hike rates this year despite strong US data.

This triggered a selling in the USD, courtesy of which the spot bottomed out at 0.7087 levels. The focus now is on the RBNZ rate decision. Traders would like to see if the central banks calls for more easing in the coming months.

NZD/USD Technical Levels

Acceptance above 0.7205 (38.2% of 2014 high – 2015 low) could trigger further unwinding of kiwi shorts initiated in anticipation of RBNZ rate cut and open doors for 0.7256 (Aug 2 high). Further gains could run into resistance at 0.73. On the other hand, a breakdown of support at 0.7212 (daily low) under which key support levels at 0.7087 (Monday’s low) and 0.70 handle.