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NZD/USD: capped at 0.6880, bias remains bearish

  • NZD/USD: unable to get through the 10 4-hr SMA.
  • US dollar weak, but a rebound could see Kiwi down to 0.6820 initially.

Forex today: Wall Street's momentum slows, risk sentiment subdued, DXY below 94 handle

NZD/USD has been capped at 0.6880 and in the vicinity of the descending 10 SMA on the 4-hour sticks, unable to benefit any further from the greenback's slide below the 94 handle with a heavy yen cross. Currently, NZD/USD is trading at 0.6875, down -0.04% on the day, having posted a daily high at 0.6882 and low at 0.6873. The overnight low was located at 0.6844.

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NZD/USD biased lower on Central Bank divergence

NZD/USD has been recovering on the 0.68 handle after the late July high at 0.7557 and Sep high of 0.7341 and the latest slide in Oct from 0.72 the figure. The divergence between the RBNZ (slightly more hawkish on its 2019 outlook) and the Fed keep the pair anchored on recovery attempts in the 0.69 handle, most recently capped by the 21-D SMA at 0.6943. Fed fund futures yields continued to price the chance of a Fed December rate hike at almost 100%.

NZD/USD 1 day: 

"Daily momentum has swung back to negative, technically targeting the Oct low of 0.6820 which probably requires either a sharp rebound in the USD or further deterioration in risk sentiment," argued analysts at Westpac.

NZD/USD 1-3 month:  

"If the RBNZ remains firmly on hold, as we expect, and the US dollar rises on a delivery of a Fed interest rate rise in December, then NZD/USD should fall to 0.67 by year end", the analysts added.

NZD/USD levels

NZD/USD broke the 0.69 handle this week and dropped further below the 100 SMA on the 4-hour sticks. A follow-through exposes the 26th Oct low of 0.6818. To the upside, 0.6980 guards 0.7055, 9th Oct low. 

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