Overview:

NZD/USD is expected to consolidate with a bearish bias after hitting a two-month low of 0.8427 this morning. It is undermined by the weak dairy prices (as Fonterra's GDT Price Index fell 8.4% in the latest auction Tuesday), Kiwi sales on soft NZD/JPY cross amid increasing investor risk aversion, Kiwi sales on buoyant AUD/NZD cross, and the positive dollar sentiment. But NZD/USD losses are tempered by the NZD-USD interest differential. Limited FX impact on NZD from drop in New Zealand's unemployment rate to 5.6% in 2Q--its lowest level since 1Q 2009--versus forecast of 5.8% and 1Q's 6.0%, as the participation rate and the quarter-on-quarter job growth rate were worse than tipped. The daily chart is negative-biased as MACD is bearish, stochastics is reverted to a bearish mode in the oversold zone, five and 15-day moving averages are declining.

Trading recommendations:
The pair is trading below its pivot point. It is likely to trade in a lower range as far as it remains below its pivot point. Short position is recommended with the first target at 0.84. A break of this target will move the pair further downwards to 0.8350. The pivot point stands at 0.8470. In case the price moves in the opposite direction and bounces back from the support level, then it will moves above its pivot point. It is likely to move further to the upside. In that scenario, a long position is recommended with the first target at 0.8530 and the second target at 0.8560.

Resistance levels:
0.8530
0.8560
0.8585

Support levels:
0.84
0.8350
0.8315