NZDUSD could be in for more declines, as a double top pattern can be seen on its 1-hour time frame. Price failed in its last two attempts to break past the .6550 minor psychological mark and is currently testing the neckline around .6440.
A break below this support zone could push NZDUSD lower by an additional 100 pips or more, taking price down to the .6340-.6350 levels. However, the 100 SMA is above the longer-term 200 SMA, indicating that the path of least resistance is to the upside.
In addition, both RSI and stochastic are moving out of the oversold area, indicating a potential pickup in buying pressure. In that case, price could make another test of the resistance at .6500.
Earlier today, the RBNZ decided to keep interest rates on hold at 2.50% as expected, but Governor Graeme Wheeler reiterated that they are keeping the door open for additional easing measures. Around this time, Fonterra announced downgrades in its milk price and payout forecasts, acknowledging the challenging global conditions and imbalance in supply and demand.
Prior to this, the FOMC also decided to keep monetary policy unchanged for the time being. Fed officials noted that they are closely monitoring the developments in the global economy and removed the reference on balanced risks to their outlook, confirming that they are concerned about the slowdown in China and the drop in oil prices.
US durable goods orders and initial jobless claims are up for release next and strong results could reassure dollar traders that the US economy can stay resilient. As for the Kiwi, commodity price trends and market sentiment could drive its price action.
By Kate Curtis from Trader’s Way