NZD/USD is expected to consolidate with bearish bias after hitting the five-year low of 0.6561 this morning. NZD sentiment is hurt by the 10.7% drop in Fonterra's GDT Price Index and 13.1% drop in average price for whole milk powder to $1,848/ton at the latest Global Dairy Trade auction. NZD/USD is also weighed by the positive dollar sentiment, divergent monetary policy stances of the Reserve Bank of New Zealand and the US Federal Reserve, kiwi sales on the buoyant AUD/NZD cross, and softer-than-expected New Zealand Q2 CPI of 0.4% on-quarter (versus forecast 0.6%).
The daily chart is negative-biased as stochastics is bearish, five- and 15-day moving averages are declining.
The pair is trading below its pivot point. It is likely to trade in a lower range as long as it remains below the pivot point. Short positions are recommended with the first target at 0.6480. A break of that target will move the pair further downwards to 0.6410. The pivot point stands at 0.6605. In case the price moves in the opposite direction and bounces back from the support level, it will move above its pivot point. It is likely to mo ve further to the upside. According to that scenario, long positions are recommended with the first target at 0.6670 and the second target at 0.6410.
Resistance levels: 0.6670 0.6725 0.6775
Support levels: 0.6480 0.6410 0.6360