NZD/USD extends slide to nine-week lows near 0.7100 as the US dollar strengthens ahead of the FOMC meeting

• US dollar gains momentum versus NZD, AUD, and CAD ahead of Fed’s meeting.
• NZD/USD heads for the lowest close since mid-April.

The NZD/USD dropped further during the American session and bottomed at 0.7103, the lowest level since April 14. The decline took place amid a stronger US dollar across the board ahead of the FOMC meeting.

The greenback gained momentum versus commodity and emerging market currencies amid risk aversion and higher yields while at the same time it remained steady versus European majors and the yen. Metales printed fresh lows.

Economic data from the US showed a decline of 1.3% in retail sales in May (below expectations, but April’s numbers were revised higher); the PPI rose 0.8% in May, and industrial production rose above expectations in May. The data did not affect the greenback significantly. Market participants await the Federal Reserve’s policy decision due Wednesday afternoon. No change is expected. Analysts will look for clues about when the Fed could start “tapering”.

During Wednesday’s Asian session, Chinese data will be released, including industrial production and retail sales.

Looing at 0.7100

The NZD/USD is holding a firm bearish bias, and a close below 0.7100 would suggest more losses ahead. The next strong support below is at 0.7070. On the upside, the key short-term resistance stands at 0.7155, followed by 0.7185 and then 0.7200/05 (20-day moving average).

Technical levels