NZD/USD jumps past 0.6800 after RBNZ report

The NZD/USD pair jumped above 0.6800 after RBNZ published its semi-annual Financial Stability Report, which highlighted the housing and dairy markets as major risks to financial stability outlook.

The report damped speculations of clear indication of an imminent rate-cut at RBNZ's next policy meeting in June. Risk of a sharp pull-back were already running high as there was a huge build up in bearish bets against the kiwi. Immediately after the report, the NZD/USD pair rose sharply to 0.6826 before cooling off a bit, to currently trade around 0.6800 level.

The pair has now rebounded over 100-pips from 0.6716 low tested on Tuesday and has subsequently tested a short-term ascending trend-channel support break-point turned resistance. However, given that the pair has confirmed a bearish double-top chart pattern near 0.7050-55 area and has also broken through a short-term ascending trend-channel, the pair remains vulnerable to resume its near-term downward trajectory.

Technical level to watch

From current levels, 38.2% Fibonacci retracement level of 0.6347-0.7054 up-move, near 0.6785-80 now seems to provide immediate support. Failure to hold this immediate support and a subsequent drop below 0.6760 level would confirm resumption of the pair’s prior weakening trend, dragging the pair back towards 0.6715-0.6705 confluence support, comprising of 100-day SMA and 50% Fibonacci retracement level.

On the flip side, momentum above 0.6830 support turned resistance could aim towards testing 23.6% Fibonacci retracement level resistance near 0.6885-90 region.