NZD/USD stalls post-RBNZ decline, finds some support near 0.69 handle

   •  RBNZ lowers its GDP/inflation forecast and prompts aggressive selling.
   •  Subdued USD demand/retracing US bond yields help limit further downside.
   •  Traders now look forward to the US inflation figures for fresh impetus.

The NZD/USD pair stalled its post-RBNZ sharp declines and has managed to recover around 25-pips from fresh 5-month lows.

The pair came under some renewed selling pressure during the early Asian session after the NZ central bank (RBNZ) left interest rates unchanged at 1.75% for a 19th consecutive month in May and lowered its forecasts for GDP and inflation. 

The dovish monetary policy statement clearly indicated that the RBNZ is in no rush to lift interest rates and prompted some aggressive selling around the major, dragging it to test the 0.6900 handle, the lowest since December 12.

The selling pressure now seems to have abated, at least for the time being and was being supported by a subdued US Dollar demand. This coupled with a modest retracement in the US Treasury bond yields extended some support to the higher-yielding currency and helped the pair to rebound around 20-25 pips from session lows.

Currently trading around the 0.6925 region, investors now look forward to the latest US inflation figures, which might influence Fed rate hike expectations and eventually provide some fresh impetus later during the early NA session.

Technical levels to watch

The 0.6900 handle now seems to have emerged as an immediate support, which if broken might continue dragging the pair further towards 0.6860-55 intermediate support en-route the 0.6825-20 region. 

On the upside, any meaningful recovery attempt might now confront fresh supply near the 0.6950-55 region, above which the pair is likely to make a fresh attempt towards reclaiming the key 0.70 psychological mark.