NZD/USD pushes to a high of 0.6813 on the day

Price is still finding some support from the 0.6800 level for the time being and the kiwi has pushed higher against the rest of the major bloc. There's slight dollar weakness as well, but it's nothing too notable for the time being as trading ranges remain relatively confined.

The push higher in NZD/USD only sees the pair extend its trading range to 28 pips on the day. Barring Friday's strong drop due to poor risk sentiment, the other thing kiwi buyers have going for them as of late is that short positions are being trimmed:

After hitting a record number of shorts at the end of October, positions have been squeezed since then and last week's CFTC report showed further short positions being scaled back. In terms of what this means for the NZD/USD, it could be a double-edged sword.

One can argue that the traders are still looking for more squeeze as the positioning remains stretched relative to historical levels and the current squeeze will only help give confidence for long positions to enter. However, the other way to see it is that quite a number of short positions have been squeezed out now that we could see a reloading of more entries now.

So, how do we determine what comes next? The big factor here is fundamentals and there's nothing bigger than the Fed decision this week for NZD/USD. If the Fed so chooses to hit the pause button on its tightening cycle, risk will soar and the dollar will sink. That's a double-whammy for NZD/USD sellers and given positioning data, the impact for further upside can be rather substantial.

From a technical perspective, a scenario like that will draw attention towards the 0.7000 level. That will be a key pyschological resistance barrier for buyers to break above.

In the meantime, the 0.6800 handle will be a key area of support followed by the 27 November low @ 0.6754. That should keep downside price action limited ahead of the Fed. Meanwhile, upside resistance is seen at the 200-day MA (blue line) @ 0.6844 with further swing region resistance around 0.6680-85.