NZD/USD: doubting the market will push the NZD too far

  • NZD/USD has been ticking its way lower once again and has made a fresh short-term low down at 0.6500.
  • Elsewhere, markets are on the alert with respect to the U.S. imposing extra tariffs on an additional $200 billion of imports from China.

NZD/USD has been ticking its way lower once again and has made a fresh short-term low down at 0.6500 and further below the 21-D SMA and the 10-D SMA crossing back below it as a bearish signal in a progressively bearish outlook for the Kiwi.

NZD/USD hasn't shown any real signs of recovery since the mid-point of August where the pair recovered from 0.6560 and recovered back to the 0.6720's. However, we have seen plenty of selling interest at that juncture and it appears the sellers are in control through 0.6560 previous demand level and the fundamentals continue to stack up for the dollar bulls. 

The US week ahead

For the week ahead, following the nonfarm payrolls report that smashed expectations in terms of wages growth, we have US PPI and the CPI releases are key - Bears will be looking for the CPI to underpin the case for higher rates from the Fed into the end of the year and beyond and then around the corner we have the FOMC to potentially underpin the notion of higher rates for longer. Meanwhile, markets are on the alert with respect to the U.S. imposing extra tariffs on an additional $200 billion of imports from China - should the speculation that Trump will add an additional $267 billion that he threatened on Friday, just hours before China reported another record trade surplus with the U.S, materialise, one might expect additional gains in the greenback as well. 

"It seems to be a similar story to yesterday. There is still no new news on the global trade front, and until there is more clarity, we doubt the market will push the NZD too far. In fact, it is extremely close to breaking through the psychological 0.65 level, setting the scene for a test of support around 0.6470," - analysts at ANZ Bank New Zealand Limited explained. 

NZD/USD levels

The price is trying to recover from the lowest levels since Jan 2016 and en-route back to the September 2015 levels down at 0.6289. However, there is still room for consolidation with RSI on the weekly sticks turning up. Support is located at 0.6470 while resistance comes in at 0.6640.

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