NZD/USD: consolidates at key support awaiting risk to return

Currently, NZD/USD is trading at 0.7045, down -0.09% on the day, having posted a daily high at 0.7092 and low at 0.7032.

NZD/USD is consolidating the March reversal after making fresh highs earlier in the day that was faded back to the European low. The focus for the week will be with the RBNZ.

"The RBNZ OCR Review on Thursday is likely to repeat its long-time-on hold message, but there’s a risk of a slight dovish shift in tone. Weaker dairy prices, subdued housing, and slower economic growth are only partly offset by stronger inflation and a weaker NZD TWI," analysts at Westpac explained, " We have an accommodative RBNZ (OCR to remain at its 1.75% record low for the next two years) and, more recently, dairy price weakness."

Meanwhile, the S&P 500 is off over 1% and risk sentiment is not favouring the antipodeans. The Dow is at risk of suffering their worst one-day decline since Oct. 11. There has been a correction taking place since the last nonfarm payrolls and the dovish hike from the FOMC, something preempted in the following article: 

Just a reason or two to short the 'March rate hike herd'

What actually played out was the Fed hiking rates to instil confidence for investors, but, it seems as though this has backfired. The market is aware that the recovery is not strong with the Atlanta Fed's GDP Q1 forecasts downgraded back below 1%. There are the concerns of lower/stagnant wages, higher costs of living, insufficient performances in the jobs sector, Trump's policies delayed and mired in a legislative process and thus a Federal Reserve stuck between a rock and a hard place. The DXY is below the 100 level and the bird has benefitted. NZD/USD remains supported on the 0.70 handle so far despite today's markets in risk-off mode and awaits a return of the risk-on bulls for an attack at the 0.71 handle. However, much will depend on tomorrow's RBNZ outcome. 

NZD/USD levels

 The market high has still fallen short of the next key target as 0.7098. On a break of the 0.71 handle, there is a double bottom of potential resistance at 0.7130 on the 4hr chart in mid-Feb and late Fed business. 0.7245 comes as the late Jan/early Feb support and double top resistance Feb 16th and 23rd. To the downside, 0.7030 and 0.6950/60 levels are the key supporting areas guarding 0.6880 and March lows.