NZD/USD downside bias towards 0.6970

Currently, NZD/USD is trading at 0.7008, down -0.42% on the day, having posted a daily high at 0.7047 and low at 0.7002.

NZD/USD is trading with a bearish bias on the back of the recent shift towards a Fed hike as soon as this month and such rising chances of a March Fed hike, combined with an RBNZ adamant it is on hold for a long time, should keep downward pressure on NZD/USD. Data out of the US will be key this week, especially the nonfarm payrolls numbers at the end of the week. On positive data outcomes from the US, the dollar can continue higher and there is the potential for further downside to 0.6970 next on a break of the psychological 0.7000 barrier. Analysts at Westpac continue with their bearish bias, "Granted, the NZ economy is strong and dairy prices have risen, but these forces are subservient to the US dollar’s trend."

"This week’s payrolls data should seal the deal for a March move unless it’s very weak in which case March bets are off. Growth momentum has firmed in the new year, judging by the surveys, lending upside risk to payrolls, although at this stage of the cycle hourly earnings are just as important," the analysts argued further. 

NZD/USD levels

A break below 0.7000 the double bottom nd the 200-d smoothed sma at 0.6999 opens a test of 0.6970 and 29th Nov lows. Beyond there lie 22nd Dec lows of 0.6860 and late Dec highs. 0.6680 is the key milestone support level and a break there will jeopardise the bullish trend channel from late Sep 2015 lows at 0.6270. 0.7250 to the upside will put the bird back into a bullish position.