The New Zealand Dollar (NZD) extended upside movement against the US Dollar (USD) on Wednesday, increasing the price of NZDUSD to more than 0.6700 ahead of the US monetary policy announcement which is scheduled later in the New York session. The technical bias remains bearish due to a Lower Low in the recent wave.
As of this writing, the pair is being traded around 0.6710. A support may be noted near 0.6620, the intraday low of yesterday ahead of 0.6495-0.6500, the confluence of psychological number as well as low of the last major dip as demonstrated in the following daily chart.
On the upside, the pair is expected to face a hurdle near 0.6790, the 23.6% fib level ahead of 0.6800, the psychological level and then 0.6972, the 38.2% fib level of the last major move. The technical bias will remain bearish as long as the 0.7230 resistance area is intact.
US Monetary Policy
The US Federal Reserve is due to announce its monetary policy today during the New York session. According to the average forecast of different economists, the central bank will keep its benchmark interest rate unchanged at 0.25% amid fragile growth and low inflation. Investors will be eyeing the monetary policy statement very closely for any remarks regarding rate hike. A hawkish stance may incite strong bullish pressure in the US Dollar and vice versa.
Considering the overall technical and fundamental outlook, buying the pair around current levels appears to be a good strategy in short to medium term. The trade should however be stopped out on a daily closing below the 0.6500 support area as described above.