NZD/USD: bears in control and eye key milestone support at 0.6860

Currently, NZD/USD is trading at 0.6953, down -0.09% on the day, having posted a daily high at 0.6963 and low at 0.6952.

The bird is taking the brunt of the dollar's strength and struggles with external factors such as the value of global milk prices. 

Forex today: US dollar and U.S. rates higher on Fed expectations

Analysts at Westpac offered a breakdown of the GDT dairy auction: 

"Overall prices fell 6.3%, with WMP down 12.4% and SMP down 15.5%. The declines had ben well signalled by futures markets, the WMP contracts yesterday predicting a 9% fall. Improving supply in NZ and offshore is the main explanation for the 23% fall in GDT WMP since December."

NZD/USD has fallen 7 days out of 8 and is printing fresh lows, down to test the early January support line and taking out the 200 smoothed daily average at 0.6999 on the move. The downward momentum remains strong and analysts at Westpac are targeting 0.6860 (23 Dec low).

NZD/USD 1-3 month:  

The analysts at Westpac explained that the Fed’s tightening cycle plus US fiscal expansion should maintain upside pressure on US interest rates and the US dollar, pushing NZD/USD down to 0.6900 or lower. "Additional, and more recent, negative factors have been weaker dairy prices plus the RBNZ’s emphatic reminders it is on hold for a long time."

NZD/USD levels

Bears are testing this double bottom area through the 200-d smoothed sma at 0.6999 and eye the 22nd Dec lows of 0.6860 and late Dec highs. 0.6860 is the key milestone support level and a test below here will compromise the bullish trend's channel from late Sep 2015 lows at 0.6270. 0.7250 to the upside will put the bird back into a bullish position.