FxWirePro: NZD/USD poised for further downside, 200-DMA is crucial support to watch

NZD/USD chart - Trading View 

Spot Analysis:

NZD/USD was trading 0.21% higher on the day at 0.7062 at around 07:50 GMT.

Previous Session's High/ Low: 0.7154/ 0.7042

Previous Week's High/ Low: 0.7242/ 0.7115

Fundamental Overview:

Data released earlier on Thursday showed New Zealand GDP swept past forecasts at 0.05% and printed at 1.6% in three months through to March. 

A housing boom and strong retail spending pushed GDP higher, avoiding a second recession and bringing forward expectations for tighter monetary policy.

Annual GDP rose 2.4% in the first quarter, Statistics New Zealand said, compared with analyst expectations for a 0.9% rise.

Following the upbeat data, Australia and New Zealand Banking Group( ANZ) forecasted that the Reserve Bank of New Zealand (RBNZ) would raise the Official Cash Rate (OCR) as soon as in Feb 2022 than earlier forecasted in Aug 2022.

Technical Analysis:

- NZD/USD has slipped below daily cloud and major trendline support

- Oscillators show bearish bias, Stochs and RSI are sharply lower

- Recovery capped at 5-DMA, pair erases early gains and slips lower from session highs at 0.7102

- Bearish divergence on the daily charts adds to the downside bias

Major Support and Resistance Levels:

Support - 0.7033 (200-DMA), 0.70, 0.6955 (50W MA)

Resistance - 0.7096 (5-DMA), 0.7132 (110-EMA), 0.7165 (21-EMA)

Summary: Upbeat data which brought forward RBNZ rate hike expectations buoyed the kiwi, pushing the pair higher. However, upside likely to be limited as major technical bias is bearish and strong US dollar keeps downside pressure in the pair. 

200-DMA is crucial support for the pair. Watch out for break below for major weakness. Next major bear target lies at 50W MA at 0.6955.