The pair is bouncing between 0.6980 and 0.7030, eyeing for a break

NZD/USD initially jumped up on 13 Dec following the FOMC decision, and the move to the upside was stalled by the 38.2 retracement level at 0.7030.

Yesterday, the pair came off as the NZD was the weakest performer - thanks to news that the New Zealand government cutting GDP forecasts here. But the move to the downside was supported by the 0.6980 level¹ - which was the 9 Nov high (now turned support).

The pair reversed today from some short covering (AUD/NZD hit the 100-day MA and fell thereafter) as well as a bit of comments from NZ fin min that he is happy with current NZD levels. NZD/USD rose back up to a high of 0.7026 today², nearing the 38.2 retracement level highlighted.

The NZD part of the equation may be on the front foot now, but it may soon take a backseat as the USD part of the equation comes into play. The US tax bill is the next main issue that's plaguing the dollar, so that will likely be the determining factor so as to which side of the range we may break free from.

A break to the topside, and the next levels to watch out for is the 100-day, 200-day MA convergence and the 50.0 retracement level around 0.7100-07.

Meanwhile, to the downside there's some support around the 0.6935-45 levels, but otherwise a further break may set the pair back in the range of 0.6800-0.6900 again over the last one month.

Here's that AUD/NZD move that I pointed out above in case you're wondering: