NZD/USD slumps on dovish RBNZ but key support levels still holding

Read full post at forexlive.com

In
fact,
the
rates
market
is
pricing
in
nearly
two
rate
cuts
for
the
remainder
three
meetings
by
the
RBNZ
for
this
year
now.
The
first
full
rate
cut
is
priced
in
for
October,
with
odds
of
an
August
move
also
bumped
up
to
~60%
currently.
Traders
are
seeing
~46
bps
of
rate
cuts
by
year-end.
So,
how
did
that
weigh
on
the
kiwi?

NZD/USD
was
brought
lower
from
0.6128
to
a
low
of
0.6075
on
the
decision
earlier.
In
case
you
missed
it:

The
pair
has
bounced
back
a
little
to
around
0.6090
levels
now
but
essentially,
buyers
are
still
holding
on
in
the
bigger
picture.

At
the
end
of
last
month,
we
saw
the
downside
price
action
test
the
100
(red
line)
and
200-day
(blue
line)
moving
averages.
And
that
is
also
where
we
are
seeing
price
action
move
close
to
now.

The
confluence
of
the
key
levels
is
seen
at
0.6071-73
currently.
Hold
above
that
and
buyers
are
still
staying
in
the
game.
But
break
below
and
sellers
will
have
renewed
conviction
in
search
for
a
further
downside.
The
end
June
and
early
July
lows
at
0.6047-57
will
also
be
one
to
watch.

The
divergence
between
the
kiwi
and
the
dollar
is
evident
by
the
stance
between
the
two
central
banks
currently.
While
the
RBNZ
is
teeing
up
rate
cuts
for
later
this
year,
the
Fed
is
holding
steadfast
with
Powell
reaffirming
a
more
on
hold
stance
yesterday.

That
could
exacerbate
more
near-term
downside
for
NZD/USD,
although
we
still
have
the
US
CPI
report
coming
up
later
this
week.