NZD/USD: Downside capped amid RBNZ Wheeler’s neutral bias

The Kiwi experienced two-way trades so far this session on Thursday, as investors digest comments from RBNZ Governor Wheeler and FOMC voting member Brainard delivered earlier on the day.

The NZD/USD pair recovers most losses to now trade around 0.7138/40 region, reversing sharply from daily lows struck at 0.7112 after Fed official Brainard’s pro-rate hike comments offered extra stimulus to the ongoing upbeat tone seen around the greenback versus most of its major peers.

However, the major managed to regain lost ground somewhat as the NZD bulls continue to derive support from RBNZ Governor Wheeler’s overnight comments, citing, “There is an equal probability that the next OCR adjustment could be up or down.” “If the economy develops in line with bank’s economic projections, the OCR would remain at its current level for next two years,” Wheeler added.

From a broader perspective, NZD/USD pair remains exposed to downside risks amid bearish NZ fundamentals and Fed/RBNZ monetary policy divergence.

Next of note for the major remains the US weekly jobless claims data due later in the NA session, while the Chinese services PMI data due out tomorrow will also have some bearing on the spot.

NZD/USD Levels to consider

To the upside, the next resistance is located at 0.7165 (200-DMA), above which it could extend gains to 0.7183 (50 & 10-DMA confluence) and from there to 0.7194/0.7200 (previous high/ round number). To the downside immediate support might be located at 0.7119/0.7100 (100-DMA/ key support) and from there to at 0.7074/69 (Jan 16 & 13 low), below which 0.7050/49 (psychological levels/ daily S2) would be tested.