NZD/USD consolidates post-RBNZ plunge to 2-1/2 year low, around mid-0.6600s

   •  Dovish RBNZ outlook prompts some aggressive selling on Thursday.
   •  Renewed USD buying interest adds to the downward pressure.

The NZD/USD pair now seems to have entered a bearish consolidation phase and was seen oscillating in a narrow trading band, around mid-0.6600s.

The New Zealand Dollar took a sharp knock across the board after the RBNZ surprised the market by committing to keep interest rates at record low level of 1.75% until September 2020, a full year later than previously projected. 

The central bank also lowered its forecast for economic growth over the coming year, amid risks to exports from global trade tensions, and Governor Adrian Orr kept the door open to a rate cut, reiterating that the next move could be up or down.

The outlook turned out to be more dovish that central bank’s own guidance in May and caught market participant off-guard, prompting some aggressive long-unwinding/fresh selling pressure around the major. 

Adding to this, the US Dollar buying interest picked up pace since the early European session and further collaborated towards exerting some additional downward pressure, dragging the pair to its lowest level since March 2016.

It would now be interesting to see if the pair is able to find any buying interest at lower levels or the selling pressure remains unabated as traders now look forward to the US economic docket for some fresh impetus.

Technical levels to watch

From current levels, the 0.6630-25 area seems to act as an immediate support, below which the 0.6600 round figure mark becomes the next obvious target. On the flip side, any recovery attempts might now confront fresh supply near the 0.6680 level and is closely followed by the 0.6900 handle.