NZD/USD struggling to retake 0.70 as Dollar weighs

• Kiwi struggles as the US Dollar decides the fate of the market.
• Little meaningful data for the Kiwi leaves the pair at the whim of market sentiment.

The NZD/USD is wavering beneath the 0.7000 major handle after a rough ride on Wednesday that saw the pair spike into 0.7028 before falling back below the key handle.

The pair stooped to make a new five-month low after the FOMC monetary policy meeting reconfirmed that US interest rates remain on hold for now, with another hike likely in June. The USD drove the broader market as traders sold and then bought the US Dollar heading into the FOMC's meeting, and the Kiwi is struggling to halt the downtrend that has seen the pair close lower for eleven of the last twelve trading days.

As noted by FXStreet's own Ross Burland on the FOMC meeting, "the statement shows that the Fed noted weaknesses in the economy while remaining confident that inflation will rise to their target or above. "The accompanying statement reports that the economy continues to expand at “a moderate rate”. It acknowledged a slight slowdown in consumer spending, but noted investment continued “to grow strongly” and the jobs market is “strong”.Meanwhile, inflation measures have “moved close to 2 percent” with an emphasis placed once again on the fact the inflation target is “symmetric,” explained analysts at ING Bank."

NZD/USD downside risk continues

NZD/USD levels to watch

The Dukascopy Bank Team highlighted the Kiwi's next likely resistance zone that could prevent a bullish reversal, "the general strength of the US Dollar put pressure on the NZD/USD exchange rate to the downside on Tuesday, thus allowing to prolong the rate losses for the third consecutive session. This decline was unable to surpass the 0.6991 mark, as the currency pair made a U-turn north. By the middle of Wednesday's trading session, the pair has breached both the weekly S1 at 0.7011 and the upper boundary of a junior descending pattern. However, the 55– hour simple moving average was providing a strong resistance to the rate. If the currency exchange rate moves past the aforementioned resistance, the nearest barrier that could hinder the price movement up is located at the 0.7047 mark."