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NZD/USD: Bears taking back control (due to bearish doji), and look for a break to 21-D SMA

  • NZD/USD has dropped from Asian 0.6830 highs to a low of 0.6755, settling North American trade at 0.6775 and moves sideways in early Asia, currently trading at 0.6777.

The bird was weak overnight, with the RBNZ risks springing back to the fore following retail card spending was weakening off raising alarm bells as we approach CPI next week. 

Analysts at ANZ Bank explained that CPI next week looks set to flat-line. "This adds to the recent string of news that suggests growth and inflation will disappoint the RBNZ. It’s is a theme we see persisting in a challenging global environment for risk currencies."

Meanwhile, the bird was able to recover some ground as optimism on Wall Street lives on. In absence of US data, besides the US Beige Book painting a healthy outlook, markets, instead, focused on earnings releases. Both Bank of America and Goldman Sachs reported stronger than expected earnings which helped support risk sentiment.

The US government shutdown continues on:

"Scheduled US data releases were suspended as a result of the government shutdown, leaving markets with an absence of economic news to trade on. Increasingly, estimating the impact of the shutdown on economic activity is gaining attention. The New York Times reports that each week, the shutdown reduces growth by 0.13% whilst some banks are forecasting it could reduce Q1 growth to zero. It all plays into a steady hand from the Fed," the analysts at ANZ Bank explained. 

NZD/USD levels

  • Support 0.6650 
  • Resistance 0.6860

The doji formed has played out into a bear correction on the daily sticks and the price is testing back below the 0.68 the figure. The 50% Fibo is located at 0.6929 but it appears we are now looking at the 21-D SMA for guidance with a confluence of the 25th Nov pivotal low and a break below there will open up 0.6705. A break of the 100-D SMA at 0.6685 with daily closes will sure up the negative bias again, especially on a break back below the 23.6% Fibo.

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