NZDUSD failed in its last two attempts to break below the .7150 minor psychological level, creating a double bottom formation visible on its 1-hour chart.

Price has yet to break above the neckline around the .7250 level to confirm the reversal. 

If that breakout materializes, NZDUSD could climb by at least 100 pips or the same height as the chart formation. The 100 SMA is below the longer-term 200 SMA, though, so the path of least resistance is to the downside. If the resistance holds, another bottom could form at .7150. 

Stochastic is on the move down to reflect the presence of selling pressure, which might also bring more sellers to the mix, but buying pressure could return once the oscillator makes it out of the oversold region and turns higher. 

The dollar is looking weaker against most of its peers as traders are running out of excitement for the Trump administration’s fiscal policy reform plans. According to Treasury Secretary Mnuchin, it will take until 2018 or so before the impact of the policy changes kick in and GDP growth could reach 3% at best, not the 4% expansion promised during the election campaign.

US data has been mostly in line with expectations but traders are playing it cautiously as the FOMC minutes specified that their March decision hinges mostly on the outcome of jobs and inflation reports before meeting. As such, any major disappointments could dose hopes for a hike while strong readings could revive dollar demand.

As for the Kiwi, the currency was barely hit by the 3.2% drop in dairy prices during the latest Global Dairy Trade auction. Over the weekend, New Zealand printed stronger than expected PPI input and output prices, indicating positive pressures on overall inflation down the line and lesser need for the RBNZ to cut.

By Kate Curtis from Trader’s Way