NZD/USD traders today will eye 0.6375/0.6400 area as continued resistance following Wednesday evening’s sharp sell off, says BNZ Bank FX Strategist Danica Hampton. Adds NZD’s fortunes will ultimately mirror those of the major currencies; immediate support on day should be evident on any pullback to the 0.6275-0.6300 level, “though a breach would encourage those looking for a deeper pullback for the currency in the days ahead.” Pair last at 0.6333.

The New Zealand dollar ticked up Friday on stronger equity markets, but the currency struggled to push ahead as some traders say its recent rally has topped out.

“I think the currency will head further down now that it appears to have topped out. Unless we have a big (positive) surprise from U.S. payrolls, I don’t see us pushing much higher,” said Imre Speizer, senior markets strategist at Westpac.

The U.S. releases its May non-farm payrolls data tonight.

Speizer said the Kiwi has lost its upward momentum, and has only managed to hold up because of some residual buying on the back of higher equity markets.

Domestic swap rates and bond yields were squeezed higher in a thin market. A local trader said mortgage-related paying interest is also pushing rates up, with the yield curve steepening.

“Some of the comments from various central banks overnight has seen a weaker offshore market and that has filtered through into the local market.”

He said the market was likely to tread warily ahead of Thursday’s review of the Official Cash Rate by the Reserve Bank of New Zealand. Economists are divided on whether the central bank will pause its aggressive easing cycle or cut another 25 basis points. The RBNZ has sliced the cash rate by 575 basis points since July to a record low 2.5%.

Westpac’s Speizer said the New Zealand dollar will probably struggle around current levels before dribbling down, possibly toward US$0.6150 levels.

He said equity markets are likely to lose steam once investors start expecting to see stronger data rather than data that are simply less negative. “I think expectations around data have gotten too far, people will now be looking a bit more than just for data to be bouncing off a low base,” he said.

ANZ bank said in a report that the Kiwi may face resistance around US$0.6400 ahead of the RBNZ meeting next week. However, the bank said that the U.S. dollar will be a crucial factor in the local currency’s fortunes.

“Ultimately, for the NZD to head lower, we need the USD retracement to continue. Perhaps tonight’s non-farm payrolls number could be the catalyst for this,” the report said.

USD/INR down on large inflows, but RBI likely stepped in at 47.02 to support pair after pair fell from 47.12, four dealers tell Dow Jones Newswires; pair at 47.05 vs 47.21 last close. “The central bank is believed to have been buying dollars in the last hour below 47.10,” says dealer with foreign bank. “The sudden drop in the pair from what was a narrow range since morning seems to be have come from a one-off flow,” says a private bank dealer, who tips size of flow at around $300 million. “The one-off flow probably comes from a foreign direct investment or private placement related inflow in the equity market, and seems to be coming from three large foreign banks,” says another private bank dealer, tipping a large British bank active in Asia, two large U.S. banks as likely seller.