Kelleher said the longer it stays within those bounds, "the bigger the move" when it breaks out.
The kiwi took a hit late in the day after the Bank of Japan expanded its asset purchase fund by 10 trillion yen to 40 trillion yen. The kiwi fell to 65.70 yen from 66.20 yen yesterday.
"The asset purchase programme essentially got a six month extension," said Chris Tennent-Brown, FX economist at Commonwealth Bank of Australia in Sydney.
Offsetting the negative tone was a solid New Zealand government bond auction, which attracted $2.9 billion of bids for $900 million of available debt.
Traders bid up the kiwi through yesterday despite Reserve Bank Governor Alan Bollard keeping the official cash rate at 2.5 per cent and complaining about the strength of the currency. If its strength persists without anything changing to support that, he said he would reassess the current policy settings.
That saw traders price in the possibility of a rate cut for the next monetary policy meeting in June, and they are betting on 6 basis points of cuts over the coming 12 months, according to the Overnight Index Swap curve.
The Reserve Bank of Australia will review monetary policy next week. Economists expect it will cut the target cash rate 25 basis points to 4 per cent after tepid inflation figures earlier this week.
The kiwi dropped to 78.22 Australian cents from78.68 cents yesterday, and fell to 50.16 pence from 50.44 pence.