NZD/USD: walking to the downside ahead of this week's potentially more hawkish RBNZ

Currently, NZD/USD is trading at 0.6893, down -0.21% on the day, having posted a daily high at 0.6929 and low at 0.6880.

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NZD/USD is performing better than the Aussie, granted, but is trading with a lack of direction below the 0.69 handle and cluster of hourly and daily ma's with a bearish bias. Fundamentally, markets are back to basics and forecasts of the Fed hiking next month and continuously on a tightening path is pressuring the pair to the downside. This week, however, the RBNZ will meet and there are the possibilities of a more hawkish outcome from the Central Bank that would serve to support the bird within this phase of consolidation.

"We expect it to keep the OCR on hold at 1.75% but with a stronger signal that the next move will be up," explained analysts at Westpac, adding, "it will need to acknowledge how conditions have changed in the last three months, with notable positives being the jump in inflation, drop in NZD TWI, and higher dairy prices. These more than offset the cooler housing market and Q1 GDP disappointment. We expect the OCR projections to be shifted in a hawkish direction, implying a rate hike in late 2018 (compared to late 2019 in March’s MPS)."

NZD/USD levels

To the downside, the 0.6880 level is first support as of today's lows at 0.6879. On a break lower, the next levels are 0.6820/50/60. Below 0.6700 we have the 0.6675 level as the 29th May 2016 high. On the upside, 0.6920/30 is the immediate resistance area still along with the 20-d sma at 0.6940 ahead of psychological 0.70 level. The 17th April highs of 0.7035 are next up ahead of 0.7060/70, being a further key resistance area through the 200-d ema (0.7047). The double bottom at 0.7130 as the mid-Feb lows could be a strong area of resistance.