NZD/USD fades a spike to 0.7100, Fed minutes eyed

The bulls failed to take on the three-day recovery above 0.71 handle, knocking-off the NZD/USD pair back to test the 5-DMA support located at 0.7077 levels.

NZD/USD trims gains on NZ political uncertainty

The Kiwi remains positive for the second straight session, although further upside lacks follow-through, as investors remain on the side-lines amid a lack of fresh catalyst and ahead of the key Fed minutes release, which could trigger an extensive USD rally across the board.

Moreover, renewed concerns over the New Zealand political scenario, after the Nationalist Party leader himself dropped a self-imposed deadline of Oct. 12 to announce the new government, also capped the recovery gains in the spot.

NZ First leader Winston Peters said after four days of talks, “We’re making huge progress finding what we agree on, what we don’t agree on, what we can still negotiate on, where we might take things into the future by co-operation.”

Meanwhile, the major also remains on the defensive amid resurgent USD demand, as monetary policy divergence between the Fed and RBNZ back in play, especially with the FOMC minutes to reflect the hawkish surprise delivered by the Fed at its Sept meeting.

NZD/USD Levels to consider                                                                              

NZD/USD is down to test 5-DMA at 0.7077, with 0.7052 (4-month low) still guarding 0.7000 (round number) and a break back below 0.6950 (psychological levels) are key near-term downside areas. To the topside, a test of 0.7100 (key resistance) due on the cards, which could open doors towards 0.7124 (10-DMA).