NZD/USD: all quiet ahead of key risks, capped by bearish wedge formation

• Key support is located at 0.6880 while resistance is located at 0.7060.
• Traders happy to go with the flow ahead of key risks. 
• Bulls capped by bearish wedge formations. 

NZD/USD is currently consolidating outside of the bearish wedge, robust but on guard ahead of this week's key risks. The bird continues to find resistance from the descending trendline, squeezed out by the rising bearish wedge. Currently, NZD/USD is trading at 0.7023 from a high of 0.7053 and a low of 0.7015.

NY traders were happy to go with the flow on Friday and that sentiment has followed through at the start of this week with the US benchmarks all in the green.

"Despite the G7 discord, currency markets appeared to lack conviction overnight ahead of today’s US-North Korean summit and key central bank meetings later in the week. The NZD looks rock-solid in its current range as a result, so will probably take a big catalyst to see new trends develop. This week has a few of those potential catalysts,"

analysts at ANZ explained. 

FOMC expectations:

We think it is highly likely that the FOMC will raise rates at the June meeting; at this point it would be extremely surprising were the Committee to forgo a rate hike. More important, with respect to the “dot plot,” given that economic momentum has accelerated since March, we expect the Committee’s new rates forecast to reflect a total of four rate hikes in 2018, up from three previously. There is also some risk that the longer run median “dot” moves up given the distribution of participants’ forecasts. We continue to expect a total of four rate hikes from the FOMC in 2018 with hikes in September and December after the expected rate increase at the June meeting.

Analysts at Nomura explained.

NZD/USD levels

Key support is located at 0.6880 while resistance is located at 0.7060. The bird is robust above the 200-month moving average support at 0.6994 while the weekly technicals stay bullish. The price targets the descending 10-W SMA at 0.7055.  Meanwhile, 0.7440 comes as the key upside target as the January tops on the wide, however, this bearish wedge formation keeps the bulls at bay while below 0.7080.  On the downside, a break of 0.7000 and 0.6980 opens risk to 0.6850/80. 0.6780 comes as next downside target meeting the lows of mid-Nov 2017.