NZD/USD: en-route for a major correction?
|Currently, NZD/USD is trading at 0.7144, up 0.87% on the day, having posted a daily high at 0.7147 and low at 0.7079.
NZD/USD has stayed with the bid having made a fresh high for the week overnight in a short squeeze onto the 0.71 handle. US yields and the dollar were whacked as a result of the mixed messages from the FOMC minutes that had something for both the hawks and doves.
However, the FX space has trimmed the long dollar position and has given rise to a demand for the higher betas that were consolidating at the bottom of their bearish ranges this week. Still, the hung parliament conditions in NZ is a weight on the bird and the price is meeting the break-out a point for the 3rd October. However, the NZ government decision is expected by end of next week. "The announcement of the government composition will probably cause a kneejerk response in the NZD - up for National, down for Labour – after which the direction of the US dollar will dominate", according to Imre Speizer, a Research Analyst at Westpac.
NZD/USD levels
Above 0.7150, the bird really needs to get through 0.7240 to confirm that a significant correction of the 20th Sep highs is in place - a subsequent break of there could open doors towards 0.7315. 0.7370 (the 9th Aug high) is the next key hurdle on the upside and a break there would solidify a bullish trend back towards 0.7522 and the YTD highs so long as there are closes on the 0.74 handle and beyond the post FOMC kneejerk highs of 0.7434. To the downside, 0.7052, a 19-week low, guards the psychological 0.7000 level to target 0.6908, 11th April low.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.