NZD/USD: big moves and eyes on US politics, neutral outlook technically
- NZD/USD in the hands of US politics at the start of the week.
- NZD/USD neutral outlook.
The Mueller inquiry has given USD bulls plenty to ponder, as analysts at ANZ noted, so moves in NZD/USD are going to be driven this week but political sentiment in the US to start the week off. NZD/USD is currently trading at 0.6865, with a high of 0.6870 and a low of 0.6852 having opened in a strong bearish gap on a strong opening bid for the greenback.
Kiwi to benefit from a renewed bout of dollar weakness - ANZ
NZD/USD traded as high as 0.6910 on the last trading day in the US shift when political headlines, yet again, took control of markets forcing safe haven assets higher, the 10-year yields 5bps lower and the greenback off a cliff with the DXY dropping to as low as in the 92.50's, losing the 93 handle.
How will the dollar behave at the start of this week on political dramas?
As reported last week by FXStreet editor Eren Sengezer, on Friday morning, Michael Flynn, Trump's ex-national security adviser, was taken into custody after he pleaded guilty to lying to the FBI during the investigation of Russia's involvement in the 2016 presidential election, and that sent the dollar off a cliff and a flight for safety.
However, a bounce-back came on the heels of progress over the tax reform in the Senate, a rise in the US ten year yields and come confusion over Flynn who was actually instructed to contact Russia 'after' the election, not before, as ABC news incorrectly reported.
- Support 0.6780.
- Resistance 0.6920.
NZD/USD's 0.6815-20 support level is guarding a break of the 0.68 handle towards the 17-month low level of 0.6780. However, the strong recovery last week to aforementioned post political headline news highs and the subsequent 50% recovery leaves the pair neutral, (daily RSI and The Momentum indicators confirming a neutral outlook), just below the 200-hour SMA at 0.6876. The key target to the upside stays with the 28th Nov double-top highs of 0.6942.