NZD/USD bears in control, now looking to 0.6616

• NZD/USD is pretty much unchanged after the RBNZ presser.
• NZD/USD had plummetted down to 0.6698 on the basis that the RBNZ lowered its OCR forecast, dropping from 0.6743.
• The bird remains at the lower end of the 0.67 handle, but crucially, the price is below the 0.6720 prior support level

There is little reason to hold onto the bird, as there is no carry on the tradeoff vs the greenback now where rates there are heading high o the Fed's normalisation path, and the RBNZ are likely on hold now until way into 2019/20's after leaving their cash rate at 1.75% as widely anticipated. 

The forward guidance was unexpectedly dovish, with "We expect to keep the OCR at this level through 2019 and into 2020, longer than we projected in our May Statement. The direction of our next OCR move could be up or down" - analysts at TD Securities noted, explaining that the RBNZ was justifying this low for longer dovish shift while the 2% mid-target inflation forecast was pushed back into early 2021, despite a lower TWI profile and noting that the OCR profile was flattened, the first increase pushed back to Q3 2020.

RBNZ dovish shift justified?

The analysts at TD Securities argued, however, that the economy is in far better shape than these inflation and cash rate projections suggest, but explained that the RBNZ appears determined to sit on its hands for quite some time. The slump in business own activity (and investment intentions) remains the #1 concern for the RBNZ and the government at the moment (although a lower cash rate won't help businesses, policy certainty will).

In the presser, the main takeaways were 

• Risks balanced, rates could go higher or lower.
• They will do what central banks do best  - watch worry and wait.
• Grexit risk: a highly diversified economy and they will ride those waves...
• Nuetral OCRestimate is about 3.5%.
• Kiwi is close to fair value.
• Pleased with the way the kiwi has been performing in last few quarters.
• Low inflation continues to the gove the RBNZ scoop to keep the OCR lower for longer.

NZD/USD levels

To the downside, 0.6720 gave out and then the immediate post-RBNZ announcement/MPS low of 0.6704 did as well. Eyes are now on the 1st July lows of 0.6689 and 0.6616 further down. Further out, 0.6550 then guards a run to the 0.6470s. On the flipside, the Key resistance remains located at 0.6860 but for the near term, 0.6770, 200-hr SMA, 0.6780 100-4hr SMA come first. Should bulls manage a breakthrough recent highs and the top of the channel, there with daily closes, 0.6920 as the June high comes as a key level. The 200-month moving average resistance is at 0.7020.