- NZD/USD basing below key SMA's and eyes 0.6818.
- RBNZ to turn more dovish?
NZD/USD has been in a decline from 0.6979 highs set last week and has continued lower at the start of this week in the dollar's resurgence with a break of the 200-hourly SMA at 0.6921. Currently, NZD/USD is trading at 0.6898, down -0.46% on the day, having posted a daily high at 0.6939 and low at 0.6894.
The bird broke away to the downside from the early European high of 0.6936 and followed through below the 0.6916 was Asia low and is now basing below the ascending trendline support from the 6th Nov reversal.
Central Bank divergence driving force
In the absence of data, the focus stays with the divergence between the Fed and RBNZ. "we expect that the RBNZ will be surprised by slow GDP growth, weak house prices and falling export commodity prices over 2018. If we are correct, the RBNZ will become more dovish,' argued analysts at Westpac. However, the week ahead will pick up for the US calendar at least and focus there will stay with US CPI and US retail sales on Wednesday while Fed's Brainard and Williams speak on Thursday.
NZD/USD is basing below the 4-hr 100 SMA at 0.6905 while the 10-SMA is crossing below the 50 SMA on the same time frame as momentum develops below its midline exposing 0.6880 (Oct 30 high). A break there opens 26th Oct low of 0.6818. To the upside, 0.6980 guards 0.7055, 9th Oct low.
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