NZD/USD: Bears in control testing S1 and corrective channel support

While US equities ended higher on a solid footing on Friday, the mood has been tainted from the IMF meeting on the weekend as a reminder that world growth forecasts have been downgraded. Trade tensions were a theme cited as well as rising US yields and the USD.

Attentions stay with the US and China's ongoing trade dispute and White House economic advisor Larry Kudlow threw up further uncertainty to the Trump-Xi meeting whereby Trump has recently accused the Chinese of meddling in the upcoming U.S. election in which Democrats are favoured to take control of the House from Trump's Republican Party - China has denied trying to influence the election. Vice President Mike Pence and Secretary of State Mike Pompeo have used increasingly tough rhetoric toward China and the antipodeans hang in the balance of performances in the Yuan, EM-FX, the US dollar and trade sentiment while the RBNZ is expected to come with a dovish tone at November's meeting. 

"While this week’s local CPI figures are likely to be on the firm side, we still feel the kiwi is going to struggle to sustainably rally, with plenty of catalysts for worry remaining,"

analysts at ANZ New Zealand said today.

NZD/USD levels

• Support 0.6460
• Resistance 0.6590

The bulls ran out of luck last week and the bird was taken back by the bears through R1 with 0.6527, the 38.2% confluence area of late Sep highs and recent lows and channel resistance, a tough nut to crack at and hold above. A break now of the channel's support opens the pathway to 0.6482, S2, 0.6463, S3, and 0.6424 - recent swing lows.  The monthly charts remain indicative of a continuation to the downside, with RSI headed south towards 30 with chars in a sea of red and no obvious indication of any sustainable let-up. On the flip-side, the 100 4hr SMA at 0.6562 coincides with R3 guarding the broader bearish descending channel resistance.