We expect the NZD to come under downward pressure given our expectations for a 25bp cut by the RBNZ, in the context of a weak core inflation outlook and an overvalued currency. Technically, our bearish view for NZDUSD was encouraged by the recent downside range break to levels last seen in September 2010. May’s monthly engulfing candle adds to our bearish conviction. We expect further weakness towards the 0.7000 psychological area in the near term. In the weeks and months ahead, we are looking for NZDUSD to trend lower towards greater targets near 0.6870 and potentially the range lows in the 0.6560 area
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