NZD/USD: US elections gripping investors nerves, capped on FOMC

Currently, NZD/USD is trading at 0.7285, down -0.04% on the day, having posted a daily high at 0.7290 and low at 0.7285.

NZD/USD has been capped on the FOMC statement that has encouraged markets to be prepared for a rate hike in December. However, with nonfarm payrolls and the US elections next week, investors are nervous and risk-off play was the theme with the S&P 500 that was recording the longest losing streak in five years.

Full statement Fed decision: Nov 2, 2016

The Fed's statement told markets today that there has been some further evidence that a case for rate hike has continued to strengthen while inflation has increased some what since earlier this year. Economic conditions will evolve to warrant a continuation of rate rises and near term risks to the economy appear balanced. Markets are pricing in a 78% chance of a rate hike this December.

NZD/USD levels

Analysts at Westpac explained that the weaker US dollar plus recovering dairy prices and a strong economy should help boost the NZD even further, targeting 0.7370 (22 Sep high) during the days ahead. "NZD/USD 1-3 month:  Targets 0.6950 or lower as long as the RBNZ cuts to 1.75% in November and the Fed tightens to 0.625% in December, as we expect". 

Meanwhile, with spot trading at 0.7286, we can see next resistance ahead at 0.7289 (Daily Open), 0.7289 (Monthly High), 0.7289 (Weekly High), 0.7290 (Daily High) and 0.7312 (Yesterday's High). Support below can be found at 0.7285 (Daily Low), 0.7275 (Weekly Classic R3), 0.7267 (Hourly 20 EMA), 0.7247 (Daily Classic R3) and 0.7231 (Weekly Classic R2).

Key event: US election panel

Meanwhile, don't miss our US election panel with expert guests, Adam Button and Martin Armstrong, hosted by FXStreet's Ross Burland.