NZD/USD on the offers and testing 0.6950

Having reaching weekly highs at 0.6975, the NZD/USD pair failed to sustain at higher levels and fell sharply towards the mid-point of 0.69 handle.

Currently, the NZD/USD pair trades -0.11% lower near session troughs of 0.6954, eyeing a break below 0.6950 – psychological levels. The Kiwi met fresh supply as broad based USD selling stalled amid a tepid recovery in the treasury yields.

While from a wider perspective, the spot remains vulnerable amid persisting divergence between the RBNZ and Fed monetary policy outlook, with the former expected to ease further next year.

The major now awaits the US Chicago PMI and erratic moves cannot be ruled in the day ahead, as we wrap up this year and volumes continue to slow.

NZD/USD Levels to consider

To the upside, the next resistance is located at 0.6999 (20-DMA), above which it could extend gains to 0.7013 (daily R2) and from there to 0.7080 (50-DMA). To the downside immediate support might be located at 0.6885 (Dec 22 low) and from there to at 0.6850 (psychological levels), below which 0.6800 (zero figure) would be tested.