- NZD/USD has been testing the 100 SMA on a correction towards the 0.66 handle from the lows of 4th Sep down at 0.6529.
- The dollar has been on the back foot and is losing sight of the 95.70 key level.
NZD/USD has followed on the heels of the Aussie that managed a bid despite the weakening outlook in China (stocks lower) and the prospects the yuan heading to the psychological 7.00 level.
The Aussie was bid on the strong GDP data that forced a knee-jerk of short covering that was in fact sold into again and the Aussie fell all the way down to lows of 0.7144 as Asian bourses sold off., (Jakarta stock index closed down 3.7 pct, biggest one-day fall since Nov 2016). The bulls piled in there and we are where we are now as the greenback keeps sliding - AU-US government yield spreads were also tightening while equities and AUD/JPY rallied - the Kiwi simply followed suit.
Analysts take:
"After bumping up against support a few times yesterday, the kiwi pushed modestly higher overnight largely on the back of a weaker USD. We see kiwi lower in time, but do expect choppy price action against the USD as its story starts to look more fully priced," analysts at ANZ explained
Support 0.6540 Resistance 0.6640
NZD/USD levels
The price is overbought on the hourly time frame, however, the upside has plenty of room to go on the daily sticks where the price is barely above the lows for the 2.5 year period. There is a bullish tint on the technicals although the carry stays with the dollar and there is no reason to own the Kiwi. However, the ebbs and flows are paying off for those looking for profits in short covering. However, there is a strong level of support at this juncture and we will have to see some strong cross-currents to break this level of support.
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