NZD/USD: awaiting further impetus this week, 0.6780/0.6920 are key levels

• NZD/USD: more of the same tight ranges to start the week?
• NZD/USD needs a break of 0.6920 through the 100 4-hr SMA.

NZD/USD has been confined to a tight range of consolidation after the recent recovery attempt from 0.6780 that reached a high of 0.6905.

It was a light ending to the week with Thanksgiving holidays in the US and Japan and eyes stayed with commodity prices and German politics. We had a major U-turn from Germany’s Social Democratic Party when news hit the wires that they were open to talks with Merkel on forming a government, lifting risk appetite and supporting the Kiwi and higher beta plays. However, risk was trimmed after a slightly weaker US PMI for November then saw risk appetites moderate. The US Markit composite PMI for Nov that fell to 54.6 while both manufacturing and services weakened slightly.

Commodity prices were robust on the back of oil and industrial metal performances. There were headlines that Russia and OPEC have agreed to a framework to extend oil cuts to the end of 2018, pushed prices (+11⁄2%) toward 21⁄2 year highs.

The week ahead: breakdown of key events - Nomura

Analysts at ANZ expect more of the same tight ranges today. "Volatility will pick-up mid-week with US monetary and fiscal policy discussions and some local data," the analysts added and also noting that this week will be about the US monetary policy, with several key speeches, and whether or not there is any further progress on tax reform.

NZD/USD levels

With markest in consolidation, the technical picture remains the same and the daily RSI is unwinding oversold conditions while the monthly technicals are bearish pointing to a period of consolidation. Key support comes at 0.6780 while resistance is located at 0.6920 above the 100 4-hr SMA at 0.6883. 0.6980 as the 9th Nov top opens 11th Oct support level of 0.7054 as a key target.