NZD/USD depreciates further, reaching levels sub-0.6950
- NZD/USD extends decline beyond 0.7000 to 0.6940 area.
- Higher US yields and the risk-off mood have weighed on the NZD.
- NZD/USD: Below 0.6981 the pair might reach 0.6805 – Credit Suisse.
The New Zealand dollar has resumed its downtrend from last week’s highs near 0.7100 on Tuesday, breaching the 0.7000 psychological level to hit intra-day lows near 0.6940 so far.
US strength and the risk-off sentiment hurt the kiwi
Monday’s recovery attempt, following Friday's 0.75% reversal from last week's high at 0.7075, lacked follow-through and the pair has resumed its decline on Tuesday. The overall US dollar strength, fueled by higher US yields, on hopes that the Federal Reserve will start tapering its bond-buying program, has weighed on the NZD.
Furthermore, the negative market mood with surging energy prices threatening the post-pandemic recovery in Europe and fears about the debt crisis at the Chinese Evergrande Group have increased selling pressure on the risk-sensitive New Zealand dollar.
NZD/USD: A close below 0.6981 might send the pair towards 0.6805 – Credit Suisse
According to Credit Suisse's FX Analysis Team, a successful breach of recent lows at 0.6981 might increase negative pressure and push the pair towards 0.6805: “A close below the 50% retracement of the July/August upswing and the aforementioned price lows at 0.6988/81 would turn the short-term risks lower within the broader range, with next support seen at 0.6933/29, then 0.6878 (…) We would expect 0.6805 to define the bottom of the range, with our broader outlook staying neutral.”
Technical levels to watch
Author
Guillermo Alcala
FXStreet
Graduated in Communication Sciences at the Universidad del Pais Vasco and Universiteit van Amsterdam, Guillermo has been working as financial news editor and copywriter in diverse Forex-related firms, like FXStreet and Kantox.
