NZD/USD broke out of 0.6745-0.6565 range trade on Friday, which it was trading in since the past month.
- Positive reversal in global risk sentiment has boosted high-yielding risky currencies which have outperformed last week.
- RBNZ meets this Thursday and markets have intensified expectations for an OCR cut, following a slump in NZ business confidence and inflation expectations.
- There is scope for RBNZ to ease twice this year, but markets have fully priced in only one cut, making further downside vulnerable.
- For now a rate cut is full priced in, we see scope for gains in the pair upto 0.69 levels.
- Immediate resistance is seen at 0.6819 (Mar 4th highs) and then at 0.6835 (Jan 4th highs).
- Supports on the downside are seen at 0.6724 (5-DMA) and further below at 0.6684 (10-DMA).
- Other NZ data which could impact the pair are: Q4 manufacturing (Tue), electronic spending (Wed), and manufacturing PMI and food prices (Fri).
Recommendation: Buy dips around 0.6774, SL: 0.6724, TP: 0.6835/0.6850
