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NZD/USD bears eye 38.2% retracement Fibo

  • NZD/USD has moved through and above 68 US cents.
  • NZD/USD can head towards the 61.8% Fibo at 0.7048.

NZD/USD is currently trading at 0.6854 from a high of 0.6876 having traded as low as 0.6849 so far at the start of the week. The bird has moved through and above 68 US cents, reflecting a perfect storm of domestic and global factors while data has been positive. The bird has been supported on the prospects the RBNZ has moved towards a neutral stance. 

"The week is likely to start with the NZD again unlikely to be pushing higher, but whether it can make progress to the downside is another matter. It has been reasonably resilient through the latest equity malaise in part because the USD is effectively now a high quality ‘risk’ currency too," analysts at ANZ Bank New Zealand explained.

Eyes on the downside

Meanwhile, analysts at Westpac argue that recent strength in the NZD will weigh on inflation and have revised down their CPI forecasts, though expected declines in the NZD will provide some support to inflation over the projection:

"We expect that the RBNZ will remain focused on core inflation and not be overly swayed by volatility in tradable inflation. That said, recent moves in the NZD highlight the importance of global risks and there is a risk that the NZD is persistently higher, weighing on core inflation and net exports. But for now, we are comfortable with our forecast for a lower exchange rate."

NZD/USD levels

  • Support 0.6850 
  • Resistance 0.6980

The bird recently penetrated the 50% Fibo of the 2018 downtrend although a break below the 200-D SMA located at 0.6855 risks a slide to the 38.2% retracement Fibo (at 0.6810). On a refocus of the upside, the bird can head towards the 61.8% Fibo at 0.7048. 

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