NZD/USD retreats from 2-week highs, still up for the week

• The NZD/USD retreats as USD gains momentums. 
• Kiwi holds only a minor part of RBZN gains. 
• Focus on US tax reform. 

The NZD/USD pair moved off weekly high during the American session amid a rally of the US Dollar across the board. 

NZD/USD retreats, still above pre-statement   

Earlier today the pair received a boost from the Reserve Bank of New Zealand meeting. The kiwi rose across the board after the RBNZ left interest rate unchanged at 1.75% as expected. The tone of the central bank regarding the economic outlook sounded optimist and rate projections suggested that a hike could come before previously estimated. 

NZD/USD rose from 0.6920 to the 0.6970 zone and then during the European session it peaked at 0.6979, the highest levels since October 24. After the begging of the US session lost strength and pulled back. Recently bottomed at 0.6932 and at the moment of writing was trading at 0.6940/45, 20 pips above the level it had before the RBNZ decision. 

The greenback gained momentum as the US Congress prepares the tax reform plan. The Republican-led tax-cut legislation continues to be a source of uncertainty 

Levels to watch 

Despite moving off weekly highs NZD/USD still holds above key short-term technical levels. To the downside, immediate support is seen at 0.6920 (uptrend line); a break lower would weaken the kiwi exposing 0.6900 and then 0.6880 (Oct 30 high). 

Imre Speizer, Research Analyst at Westpac points out that the corrective bounce from 0.6815/20 is now two weeks old. “Although gradual, shows no signs of abating and technically, it could easily reach 0.7050 – the October low, and roughly a 62% retracement”, he added.