NZD/USD: bulls looking to the 200-D EMA on 0.67 handle

NZD/USD is catching a bid on this wave of dollar weakness which kicked in the final week of May as markets positioned for a new cycle of easing at the Federal Reserve. Indeed, much has changed since the RBNZ’s May MPS (where they cut the OCR to a record low of 1.50%).

On the data front, we have little to go on domestically for the bird ahead of the RBNZ which is not expected to cut the OCR to 1.25% until August MPS. "For the minor OCR Review this Wednesday (no forecasts or press conference) we expect an on-hold decision accompanied by a restated easing bias. The balance of risks has evolved in the direction of another cut, mainly due to global developments, but not so emphatically that the RBNZ needs to appear panicked by cutting the OCR again so soon," analysts at Westpac explained. 

Meanwhile, with US-China negotiations potentially back on track, and the accumulation of the ECB, RBA and Fed all leaning with a dovish bias, the outlook is mixed. "With so much uncertainty around, there is a risk that if the RBNZ fails to strike the appropriate tone at this week’s OCR Review, the NZD would lift markedly against its dovish peers. Markets expect the RBNZ to cut policy again this year, with a full cut priced in for the August MPS at present," analysts at ANZ Bank argued.

NZD/USD levels

The daily Chaikin Oscillator is embarking on a cross above the zero line as bulls take on the 50-day exponential moving average (EMA) in the fifth day of consecutive gains. The 0.67 handle is up for grabs which meets the 200-D EMA at 0.6707. To the downside, the 21-day EMA is located at 0.6569 now, guarding 0.6510 and 0.6480.