NZD/USD: consolidating the Fed and dovish on RBNZ

NZD/USD has been edging lower through the 0.69 handle after the Yellen induced spike from 0.6903 to 0.6949 highs and has made recent lows of 0.6911.

Analysts at Westpac have a target of 0.7050 during the next few days, suggesting that it seems likely to test the validity of April/May's double top. Meanwhile, over a three-month outlook, they see markets pricing in further RBNZ easing (below 2.0%), and also pricing a greater chance of US Fed rate hikes. "The NZ-US interest rate outlook thus argues for a lower NZD/USD, towards 0.6500." Incidently, the shadow board recommended the RBNZ to keep on hold today.

Nonfarm payrolls edition: "Sorry Yellen, what did you just say?"

Overnight, Yellen, however, removed “in the coming months” (Nomura) from her speech and once again remained focused on inflation and being data dependent, mostly regarding the nonfarms payrolls (NFP) outcome as a one off that markets should not pin everything onto and remained upbeat.

NZD/USD levels 

NZD/USD has been in a sideways channel since the NFP's spike on 3rd June from below the 200 sma in the 4hr chart (0.6827 today) and from 0.6852 to 0.6960 channel highs having ridden the 20 1hr sma from late May business and breaking below it overnight on Yellen. An additional break to the upside looks for 0.7073 2nd May highs and to the downside, 0.6720 before 0.6675 29th May lows.

• R3 0.6976
• R2 0.6965
• R1 0.6950
• S1 0.6924
• S2 0.6914
• S3 0.6980