NZD/USD suppressed around 0.7100 on speculations of RBNZ easing

The NZD/USD pair witnessed a notable weakness on Monday and dropped below 0.7100 level. The pair has now retraced few pips but still remained well offered just below 0.7100 handle. 

Last week the pair reversed sharply from nearly 26-month high level after RBNZ unexpectedly announced to issue a brief update on its economic assessment this week on Thursday, which was interpreted as dovish by the markets. 

Adding to the selling pressure, data released from New-Zealand on Monday showed CPI rose at a slightly lower than expected pace of 0.4% during the second quarter of 2016. Weaker-than-expected inflation reading now seems to have opened room for additional rate-cut by the central bank at its next meeting on August 11, which continued exerting selling pressure on the Kiwi. 

Fresh selling now seems to have halted as the pair seems to get some respite from global risk-on sentiment. 

Technical levels to watch

Weakness below session through support near 0.7070 level seems to pave way for extension of the pair's downward trajectory towards 50-day SMA support around 0.7000 psychological mark. A follow through selling pressure now seems to drag the pair further towards its next major support at 100-day SMA, near 0.6900 round figure mark.

On the flip side, 0.7145-50 area now seems to have emerged as immediate resistance, above which the pair seems all set to extend the recovery towards 0.7200-15 horizontal resistance. A sustained strength above 0.7200 handle would negate any further near-term bearish bias and assist the pair to extend its bullish momentum towards an important resistance near 0.7300 region.