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The BNZ Strategy Team, explains that the sharp decline last week, calls into question the previous upward momentum, but they point out NZD/USD  still remains above the key support of 0.6480.

Key Quotes:  

“NZD/USD fell by almost 2% last week, a chunky fall after a decent move up to a 3-month high the previous week. The NZD fell by about 1% on the other key crosses but was flat against the AUD. US rates had a mild upside bias, supported by stronger durable goods orders and GDP data that saw some Fed easing priced out of the curve. By contrast, NZ (and Australian) interest rates fell to record low levels, as the market moved to build in a more aggressive easing cycle. More than two full rate cuts are now priced for the RBNZ (terminal OCR priced at 0.93%) and almost two more cuts are priced for the RBA (terminal OCR of 0.53%).”

“Technical charts suggest that if the currency can hold its ground above the July low of 0.6570, then that would be a positive sign and a recovery back to 0.67-0.68 wouldn’t be much of a stretch. However, a breach of 0.6570 would bring back into play the sub-0.65 lows achieved during May and June.”