FxWirePro: NZD/USD spikes, short-covering in kiwi seen as RBNZ fails to meet dovish market pricing

NZD/USD chart on Trading View used for analysis

• Bid tone around the NZD strengthened on short-covering as the RBNZ failed to meet dovish market pricing.
   
• The central bank kept the interest rates unchanged 1.75 percent in an expected dovish shift and and said the next move in rates could be up or down.
   
• The lack of a clear-cut signal that rates will be cut soon came as a hawkish surprise, sending the kiwi spiralling higher.
   
• The bank downgraded its views on GDP growth and inflation for this year, but upped the expected level where the New Zealand dollar trade-weighted index will sit.
   
• NZD/USD is currently trading at 0.6849, up 1.70% at the time of writing. The pair has bounced off cloud support and has retraced dip below 200-DMA.
   
• Broader outlook for the kiwi remains bleak. Continuation of positive momentum could see test of trendline at 0.6935.
   
• Focus on U.S. CPI data due later in the NY session for further impetus.

Support levels - 0.68 (21-EMA), 0.6755 (200-DMA), 0.6717 (cloud base)

Resistance levels - 0.6935 (trendline), 0.6941 (Feb 1 high), 0.6969 (Dec 4 high)

For details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex.