NZD/USD: bears taking control below the 0.70 handle

NZD/USD has been hit by a stronger dollar of late, and overnight, Fed's Powell kept up the mantra, reiterating that the Fed’s plan to continue raising rates. NZD/USD dropped from 0.7030 to 0.6954 and this was the lowest since December 2017. Currently, NZD/USD is trading at 0.6967, down -0.06% on the day, having posted a daily high at 0.6975 and low at 0.6965.  

Fundawrap: US heads to N.Korea, Trump pulls US out of Iran 'nuclear deal'

Geopolitical risks were forefront and centre in markets overnight, and in turn, seen as a risk to the higher betas while the reflation trade continues to unwind. China is seen as a risk for the antipodeans, with its trade friction with the USA and plans to rein in its shadow-banking sector, as explained by Greg Gibbs, Founder, Analyst, & PM Amplifying Global FX Capital Pty Ltd:

China seen as a risk for AUD - AmpGFX

What was the focus?

The focus in the main in trade overnight was with Iran and US relations where Trump axed the nuclear deal. The consequences of this are uncertain but what is concerning is that such a move has shown the fragility of global nonproliferation efforts as far as nuclear arms are concerned. However, the immediate impact to the FX space was limited, with the yen slightly firmer, but not by much and stock markets attracting a bid after an initial drop on the noise. 

NZD/USD levels

Meanwhile, analysts at ANZ expect the Kiwi to trade with global risk sentiment which is jittery before Adrian Orr’s first RBNZ MPS tomorrow morning. 

The 10-D SMA is the first hurdle to the upside, located at 0.7048, however, technicals continue to lean bearish still with the RSIs biased to the downside. Support is at 0.6880 on the wide and resistance is at 0.7011 (21-4hr SMA) and 0.7180 on the wide.