NZD/USD: downside compelling, target below 0.71 handle

Ross J Burland FXStreet

Currently, NZD/USD is trading at 0.7122, up 0.01% on the day, having posted a daily high at 0.7127 and low at 0.7117.

NZD/USD has been losing its shine within the 2016 rally as we head towards the end of the year and a critical juncture for global markets while uncertainty escalates with the pending U.S. elections and December FOMC meeting where observers are becoming increasingly concerned about the return of inflation as Central Bank's stocks of ammo are diminishing rapidly. The US dollar is higher as a result of bonds falling and yields rising within the divergence between Central Banks and the Fed that is tipped to continue increasing rates. Data wise, we had a poor release for US durable goods, but today's US GDP should rise 2.5% in Q3, although analysts at Westpac suggested, risks are to the downside but limited. The Atlanta Fed’s model predicts a 2.1% rise, taking into account last night’s data."

Analysts at Westpac noted how the short-term momentum is starting to turn negative, targeting sub 0.7100 today. "NZD/USD 1-3 month: Targets 0.6950 or lower as long as the RBNZ cuts to 1.75% in November and the Fed tightens to 0.625% in December, as we expect. "

NZD/USD levels

Spot is presently trading at 0.7122, and next resistance can be seen at 0.7122 (Daily Classic S2), 0.7127 (Daily High), 0.7132 (Hourly 20 EMA), 0.7138 (Daily Classic S1) and 0.7150 (Hourly 100 SMA).Next support to the downside can be found at 0.7121 (Weekly Low), 0.7121 (Daily Open), 0.7117 (Daily Low), 0.7108 (Yesterday's Low) and 0.7098 (Daily Classic S3).

Author

Ross J Burland

FXStreet

Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.

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