NZD/USD: en-route for a major correction?
Currently, NZD/USD is trading at 0.7144, up 0.87% on the day, having posted a daily high at 0.7147 and low at 0.7079.
NZD/USD has stayed with the bid having made a fresh high for the week overnight in a short squeeze onto the 0.71 handle. US yields and the dollar were whacked as a result of the mixed messages from the FOMC minutes that had something for both the hawks and doves.
However, the FX space has trimmed the long dollar position and has given rise to a demand for the higher betas that were consolidating at the bottom of their bearish ranges this week. Still, the hung parliament conditions in NZ is a weight on the bird and the price is meeting the break-out a point for the 3rd October. However, the NZ government decision is expected by end of next week. "The announcement of the government composition will probably cause a kneejerk response in the NZD - up for National, down for Labour – after which the direction of the US dollar will dominate", according to Imre Speizer, a Research Analyst at Westpac.
NZD/USD levels
Above 0.7150, the bird really needs to get through 0.7240 to confirm that a significant correction of the 20th Sep highs is in place - a subsequent break of there could open doors towards 0.7315. 0.7370 (the 9th Aug high) is the next key hurdle on the upside and a break there would solidify a bullish trend back towards 0.7522 and the YTD highs so long as there are closes on the 0.74 handle and beyond the post FOMC kneejerk highs of 0.7434. To the downside, 0.7052, a 19-week low, guards the psychological 0.7000 level to target 0.6908, 11th April low.
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.
