NZD/USD drops below 0.66 for the first time since March 2016

• Markets continue to offer NZD, courtesy of dovish RBNZ and Fonterra's cut in farm gate milk prices.
• Oversold conditions may put a temporary floor under the NZD.

The NZD bears are on the offensive, having pushed the currency down to the 29-month low of 0.6593 today.  

At press time, the NZD/USD pair is trading at 0.6604 - down 2.18 percent from the previous day's high of 0.6747.

The kiwi suffered a pennant breakdown yesterday - a bearish continuation pattern - after the RBNZ surprised markets with a dovish forward guidance on interest rates.

Meanwhile, New Zealand’s dairy giant Fonterra announced a cut in its 2017/2018 farmgate milk price to NZD 6.70/kg earlier today, further bolstering the bearish pressure around the NZD.

So, there is little likelihood of the bulls making a strong comeback in the short-term. However, the currency is now looking oversold as per the 14-day relative strength index (RSI). As a result, the bearish momentum may wane ahead of the weekend.

NZD/USD Technical Levels

Support: 0.6593 (session low), 0.6569 (daily pivot support 1), 0.6523 (daily pivot support 2)

Resistance: 0.6621 (session high), 0.6686 (5-day moving average), 0.6720 (Aug. 3 low)