A dovish Reserve Bank of New Zealand (RBNZ) policy outcome this week, accompanied by a bloated NZD long positioning sees the kiwi breaking under a protracted 18- month trend support. As Benjamin Wong, Strategists at DBS Bank, notes, support is arriving at a prior confluence zone pegged in the 0.6793-0.6776 zone.
Prior support confluence just ahead
“NZD has fallen post the RBNZ risk event, as it tracks the 12 bps decline on the barometer NZD 2-year yields. Speculative accounts have built persistently long NZD positions from early September. This would cap NZD’s performance given growth potential is starting to diverge against NZ, and that the long positioning is indeed bloated at this juncture.”
“For now, NZD is still under pressure given the break of the 18-month trend support as a key support peg at 0.6930 has caved in. This brings attention to the late August lows at 0.6805.”
“NZD/USD is expected to drift lower towards the 0.6805 lows and perhaps even the 61.8% Fibonacci retracement of the run-up from June’s 0.6377 lows to the 0.7465 spike high that calibrates at 0.6793. The prior confluence zone around Fibonacci markers 0.6793-0.6776 is likely the soft-landing zone that would match the increasingly oversold readings. Look for support to hold up.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.