NZD/USD drops below 0.71 ahead of the new government announcement

NZD/USD dropped to a five-day low of 0.7081 as  investors awaited the outcome of talks to form a new government.

New Zealand political uncertainty to end today?

New Zealand First, the party which holds the balance of power after last month's inconclusive elections, was set to make an announcement earlier today.

However, there is still no announcement, which made investors nervous, leading to a sharp drop in the Kiwi. NZ Hearld says, "the delay could be to NZ First pushing for at least five ministerial posts".

At the time of writing, the NZD/USD pair appears to have settled around 0.7110 levels. However, the volatility may rise again for a brief period following the government formation announcement.

NZD/USD Technical Levels

A break below the session low of 0.7081 would open doors for 0.7056 (Oct. 10 low), under which a major support is seen at 0.70 (psychological level). On the higher side, a move above 10-DMA of 0.7119 could yield 0.7161 (200-DMA) and 0.7172 (session high).