NZD/USD breaks 0.71 support, policy divergence weighs

Strong US non-farm payrolls figure and the resulting monetary policy divergence pushed NZD/USD below 0.71 handle in the Asian session.

Tests 50-DMA

The pair is trading around daily 50-MA level of 0.7089 levels. Kiwi has been offered not only due to strong US data and uptick in the treasury yields, but also due to the fact that RBNZ would cut rates on August 11.

The spot failed at 0.7219 levels on Friday before falling sharply following the payrolls release to a low of 0.7122 levels.

NZD/USD Technical Levels

Acceptance below 50-DMA level of 0.7089 would expose 0.7076 (38.2% of 0.6675-0.7325). A cut here could yield 0.70 handle (50% of 0.6675-0.7325). On the higher side, 0.7137 (Asian session high) could open doors for a re-test of 0.7171 (23.6% of 0.6675-0.7325). A break higher may force shorts to rethink about their positions and may open up upside towards 0.7219 (Friday’s high).