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NZD/USD: Drops 2c. from Wed's high on CBs double whammy

FXStreet (Bali) - The Kiwi continues under strong selling pressure in the transition from NY heading into Tokyo, with the currency being paid as low as 0.7763 following a spectacular 2 cents drop from its Wed's high at 0.7977.

The NZD got a double whammy of negative inputs, first by selling off on a less dovish-than-expected Fed, while the RBNZ monetary policy decision also did the trick for sellers, after the Central Bank dropped the reference to “further tightening will be necessary”, while reiterating that the “currency level is unjustified, unsustainable”, despite the major depreciation in the last few months.

Technically, the daily exhibits a bearish outside candle engulfing the last 4 trading days, which coupled with the loss of the 20-day EMA, communicates that sellers are back in full control. The break below 0.78 exposes now a re-test of 0.77/7710 support, where a smattering of bids defending the key level are still expected, although risks are building for a potential breakout, with the latest Oct bounce barely making it above the 23.6% fib retrac from the July-Oct decline. On the upside, even if the NZD has plenty of room to correct higher seeking liquidity, amid the unfavorable round of headlines, the currency is likely to be dependent on broad-based USD weakness to sport any significant recovery.

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