FxWirePro: Kiwi extends weakness, dovish RBNZ outcome could propel further downside in NZD/USD

NZD/USD chart on Trading View

• NZD/USD is trading 0.11% lower on the day, markets focus on RBNZ policy meeting which could offer fresh impetus for NZD.
   
• This RBNZ meeting is accompanied by the MPS and press conference which could provide further insight into the bank's future coarse.
   
• The Q2 inflation data did show an uplift in underlying inflation, but activity indicators remain weak. So the policymakers are likely to maintain a balanced outlook.
   
• Price action has broken channel base support, breaking out of 'Rising Channel' pattern. 
   
• The pair is currently consolidating channel break and holds above 61.8% Fib support at 0.6716.
   
• A dovish outcome could propel further weakness in the NZD. We then see scope for test of 78.6% Fib at 0.6788.
   
• On the flipside, retrace into channel could see retrace upto 21W-EMA at 0.6929. Break above will invalidate any bearish bias.

Support levels - 0.6716 (61.8% Fib), 0.6575 (Mar 2016 low), 0.6488 (78.6% Fib)

Resistance levels - 0.6767 (5-DMA), 0.6858 (50-DMA), 0.6928 (21W-EMA)

FxWirePro Currency Strength Index: FxWirePro's Hourly NZD Spot Index was at -70.2455 (Neutral), while Hourly USD Spot Index was at 39.4267 (Neutral) at 0600 GMT. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex.