NZD/USD slammed for fifth straight session, drops to 0.7000 neighborhood

The NZD/USD pair remained well offered and drifted lower for fifth consecutive day to nearly test 0.7000 handle. The pair has managed to retrace few pips from session low and is currently trading around 0.7030 region.

Following a test of its highest level since May 2015, the pair lost its upside momentum and reversed sharply after the RBNZ unexpectedly announced to issue a brief update on its economic assessment on July 21. Market interpreted the announcement as dovish and now expect the central bank to cut interest-rate, sooner rather than later. 

Adding to the bearish sentiment, the latest data released on Monday showed a lower-than-expected rise in CPI during the second quarter of 2016, which further fueled easing speculations in order to combat a potential deflationary environment. 

In the meantime, traders will turn their focus on the release of Global Dairy Trade (GDT) Price Index and the release of housing data from the US in order to grab some immediate momentum play.

Technical levels to watch

On the immediate downside, 0.7000 psychological mark remains immediate support to watch for, which if broken seems to continue dragging the pair towards 100-day SMA important support near 0.6900 region. 0.6950 level could provide minor intermediate support on the downside.

Meanwhile on the upside, recovery above 0.7050-55 horizontal area could gain further traction and assist the pair back towards 0.7100-0.7110 resistance area. A follow through buying interest above 0.7100 handle has the potential to continue boosting the pair further towards its next major resistance near 0.7200-0.7220 area.