NZD/USD: focus on Central Banks, 200-D SMA about to give in?

• NZD/USD: 200-D SMA at risk and 0.7220 next on the cards.
• NZD/USD: focus is on Central Bank divergences, FOMC, RBNZ up next. 

NZD/USD has been offered for the best part of the overnight sessions in the US and Europe, pushed over the 0.72 handle to test the 200-D SMA at 0.7183. Currently, NZD/USD is trading at 0.7183, down -0.82% on the day, having posted a daily high at 0.7251 and low at 0.7177.

The move comes as the dollar catches a bid ahead of the FOMC decision that will be released tomorrow where markets are pricing in a 25bp hike and are picking up cheaper markets after yesterday's negative start to the week; Equities pushed higher, yields rose and the USD strengthened overnight.

"The data pulse today and a likely picture of solid farmer earnings are unlikely to be the catalyst to push the kiwi much lower until the new Fed Governor Powell declares his hand on how many hikes might be viewed as ‘gradual’ tightening," analysts at ANZ argue.

What is up next?

However, the dairy auction was better than expected as supply ramped up in Europe (seasonal) and NZ pasture conditions improved.  For the day ahead, markets will look to the net migration (10.45am local time), which staged a comeback last month. Credit card spending is last on the docket (3:00pm local time). The data, however, is not usually a market moving event and traders will more than likely be sitting on their hands waiting for the FOMC decision and dot plot outlook. The RBNZ will also be in focus later in the day.

NZD/USD levels

The NZD/USD is testing the key 200-day moving average support. Technicals stay bearish with RSIs biased to the downside while the bird holds below the 10, 21 and 55-DSMAs. Closes need to occur above 0.7320 with the 21-D SMA falling in at 0.7276 as the first major hurdle; next stop, 0.7220. To the upside, 0.7360 is the next key upside target in the near term to open a run towards 0.7435 daily high double top.