NZD/USD: downside prevails in strong DXY post FOMC minutes

NZD/USD has sunk in a strong dollar environment, despite November being off the cards post the FOMC minutes in a divided and balanced FOMC.

NZD/USD has been trading below the 0.71 handle with lows of 0.7043 after the dollar continued to outperform with the DXY making new highs just a pip shy of the 98 handle. The bird, on the other hand, was given no favours in commodities that have softened in the wake of a strong dollar and continues to reverse the strong rally from Aug and Oct lows this year at 0.6236 to highs of 0.7482.

In respect of the FOMC minutes, analysts at Westpac explained, "On balance they arguably reveal a tad more caution on the part of the doves than many might have expected, but overall the minutes basically reinforce the thrust of recent Fedspeak: members overall felt the case for a hike had strengthened, but a "majority" wanted to see more progress first, a couple emphasized caution and 3 want to hike now (Sep)."

Westpac analysts also offered NZD/USD in a 1 day outlook: "Stalled above 0.7045, but remains vulnerable to further downside, led by the US dollar. The next major target is 0.6950."

NZD/USD levels

Current price is 0.7053, with resistance ahead at 0.7056 (Monthly Low), 0.7056 (Weekly Low), 0.7062 (Daily Open), 0.7065 (Hourly 20 EMA) and 0.7072 (Daily High).

Next support to the downside can be found at 0.7045 (Yesterday's Low), 0.7042 (Daily Low), 0.7021 (Daily Classic S1), 0.6995 (Weekly Classic S2) and 0.6985 (Daily Classic S2).

Westpac: "NZD/USD 1-3 month:  Targets 0.6950 or lower as long as the RBNZ cuts to 1.75% in November and the Fed tightens to 0.625% in December, as we expect. (13 Oct)."