The Reserve Bank of New Zealand left interest rates unchanged at 1.75% this afternoon. Although the central bank felt that the currency needs to fall further to balance growth and monetary policy needs to remain accommodative for a considerable period of time, they also see inflation rising in the months ahead. They view the current growth outlook as positive which is a sign that the central bank is growing less dovish. We think this should provide further support for NZD in the near term. The U.S. dollar remains under pressure but traders need to be careful because Yellen is speaking on Thursday.

Technically, NZD/USD is trading above the 20-day SMA and the 38.2% Fibonacci retracement of the July 2015 to September 2016 rally. 70 cents is the main support level for the currency pair with resistance at 71 cents.