NZD/USD sinks to fresh 4-yr lows ahead of 0.71

FXStreet (Mumbai) - The New Zealand gave back previous gains and fell sharply versus against the American dollar in the mid-European session, knocking-off NZD/USD to fresh four year lows on the 0.71 handle. The Kiwi plunged in today’s trade in running following discouraging NZ business confidence and inflation expectations figures which fuelled further RBNZ easing bets.

NZD/USD recovers from 0.7108

Currently, the NZD/USD pair trades lower by -0.64% at 0.7130, having previously drooped to fresh four year lows of 0.7108. NZD/USD was relentlessly sold-off during the European session after the latest NZ business optimism deteriorated in May, while inflation expectations hit a new low, spurring bets for this year's rate-cut by the RBNZ

The ANZ Business Outlook Survey showed a net 16% of businesses were optimistic in May, down sharply from a net 30% in April. The survey showed that inflation expectations were at an all-time low of 1.6% in May, which is below the Reserve Bank of New Zealand's (RBNZ) 2% target midpoint.

Meanwhile, markets now await a host of significant US economic releases later in the US session which may provide fresh cues on the pair.

NZD/USD Levels to consider

To the upside, the next resistance is located at 0.7358 levels and above which it could extend gains to 0.7400. To the downside immediate support might be located at 0.7100 levels below that at 0.6961 (April 2010 Low) levels.