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NZD/USD: a mixed picture amongst mixed risk sentiment

  • NZD/USD: the threat of a broader bout of risk aversion, not NZD positive.
  • NZD/USD: awaits Washington vote on tax reform. 

NZD/USD was rejected at the 200 hourly SMA at 0.6913 after the greenback recovered in the NY session from a low of 93.40 in the DXY to 93.89 highs. Currently, NZD/USD is trading at 0.6879, up 0.04% on the day, having posted a daily high at 0.6882 and low at 0.6870 for the early Asian session on Wednesday. 

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

Forex today: euro took the limelight, two-way business in mixed risk sentiment

NZD/USD 1-3 month:  

The analysts at Westpac also explained that 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 near-term risks for the bird come in the forthcoming vote in the US tonight on tax reform in a full House where a failure for US tax reforms to progress would dent the recent run in the USD. Further risk-off sentiment is not going to be favourable to the high betas that include the Kiwi.

NZD/USD levels

NZD/USD broke the 0.69 handle this week and dropped further below the 100 SMA on the 4-hour sticks before bounce up to test the 50 SMA on the same time frame for a short-lived spell back onto the 0.69 handle at 0.6912. Further downside below 0.6860 opens  26th Oct low of 0.6818 again as a potential target on a break of recent lows of 0.6840. To the upside, 0.6980 guards 0.7055, 9th Oct low. 

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