NZD/USD recovers from 1-1/2 month low, but remains on weak footing

NZD/USD has backed-off from today’s Asian session low of 0.6951 (lowest since June 8) but remains on a weak footing after RBNZ bolstered August rate cut bets.

Down for 7th consecutive day

At 0.6980, this is the 7th straight session of losses for the Kiwi. The pair topped out at a high of 0.7325 on July 12 and since then has been on a losing streak. Today’s decline from 0.7022 to 0.6951 was a rise in August rate cut bets after RBNZ, via its economic assessment report released today, called for further easing to address the problem of low inflation.

Meanwhile, the offered tone around the pair also gets additional support from the strong US data released off late and the resulting rise in the Fed rate hike bets. The recovery from today’s Asian session low appears largely chart driven and risks running out of steam as rate differentials remain in favor of USD.

NZD/USD Technical Levels

The immediate resistance is seen at 0.70, above which the pair could target 0.7022 (daily high). A violation there could yield 0.7056 (5-DMA). On the other hand, breakdown of support 0.6951 (Asian session low) could yield a drop to 0.6910 (38.2% of 0.6236-0.7326). Next major support is seen at 0.6874 (Mar 18 high).