NZD/USD: bulls not out of the woods yet, CRB vulnerable at neckline breakout point
|- NZD/USD has been stabilising from a low of 0.6544 although the commodity complex's broader tone remains heavy with the CRB heading for new year-to-date lows and testing the neckline support at 192.
- Currently, NZD/USD is trading at 0.6566 although the descending 10 4hr SMA at 0.6568 is closing tracked by the 21 SMA on the same time frame at 0.6575 which could offer a strong resistance area.
NZD/USD is mostly consolidating given the current environment with the DXY probing higher, weighing on commodities and the antipodeans which traders have fallen out of love within recent sessions on the count of the uber dovishness of their central banks and the loss of their carry attraction. The bigger risk stays with the growing likelihood of a broader contagion which weighs hard on commodity equity markets and risk appetite where high-beta trades lose their appeal. The Lira may have made a an impressive come back on a couple of headlines, but looking the rest of the bucket such as RUB, ZAR, MXN, BRL and that spike in CNH back towards 7.00, traders are more concerned about the undercurrent of tightening dollar liquidity offshore.
NZD/USD remains a ‘sell on rallies’ environment
"The NZD was caught in a number of cross-currents overnight: a stabilisation in Turkey, solid US data, weak commodity prices and broader EM worries. As a result, it is maintaining a level close to where it was yesterday. That said, price action is poor and it certainly remains a ‘sell on rallies’ environment," analysts at ANZ argued.
NZD/USD levels
The technical outlook remains bearish for NZD/USD while support is seen at 0.6510 below the lows of 0.6544. Resistance is located at 0.6670. 0.6510/50 guards a run to the 0.6470s and below there, 0.6240 remains as a big level that protecting the double bottom lows at 0.5910 (2004 and 2006 levels). With key resistance at 0.6670, 0.6860 needs to give before a look into 0.6920 as the June high can be had. The 200-month moving average resistance is at 0.7020.
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