NZD/USD: RBNZ looms as bears look beyond critical structural support towards 0.66 hanle

• NZD/USD starts out the week on the defensive as the dollar retains a bid, dropping 20 pips to match last week's swing low at 0.6729.
• Eyes turn to the RBNZ Monetary Policy Statement that is this week’s headline act. 

NZD/USD was flat on Friday, ending around 0.6740 as markets moved into consolidation of the dollar's advance across the board while the Kiwi was left licking its wounds following the soft NZ labour market data. Meanwhile, the RBNZ will be the main focus this week and a dovish outcome would likely spark a fresh wave of selling and an attack of the late Jan fractal low that guards the territory down to the start of the year's flash crash lows at 0.6581.

RBNZ in focus

"Since November, the labour market has flat-lined and the growth outlook has a duller pitch, though domestic inflation has been a little stronger. Global data has struck a softer note and risks have increased sharply, with central banks turning more dovish in concert. We expect the RBNZ will join the chorus this week, employing a similarly dovish tone that echoes the tenor of other central banks and market pricing, which has moved to price in a good chance of a rate cut, reflecting the changing balance of risks. That said, a dovish stance so soon from the RBNZ is not a necessary ingredient of our November cut call. The data and market pricing may well strike higher and lower notes, but we think the case for more monetary stimulus will become evident in time," analysts at ANZ Bank.

NZD/USD levels

Technically, the price is moving in on the 100-D SMA that guards the 21-Jan swing low just above 0.67 the figure. The indicators are negative, pointing to further downside with breakout potential below the aforementioned support structure with eyes on this year's flash crash lows at 0.6581. To the upside, the 23.6% fibo retracement at 0.6770 with a confluence of the round 0.6780 and the 4hr 200 SMA at 0.6771 is the initial target area ahead of the 6th Feb highs at 0.6832.