The NZD/USD is trading near the 0.58190 level this morning as the currency pair has made fresh near-term lows and is within sight of important mid-term support.
The NZD/USD was able to rise and touch the 0.60000 level last Wednesday, this in the midst of the announced interest rate cut by the U.S Federal Reserve. Intriguingly for technical traders perhaps, is the simple but important acknowledgement that the level 0.60000 worked as resistance in a powerful way. And then when the short-lived spike vanished the NZD/USD fell hard. By Thursday of last week the NZD/USD was trading stubbornly near the 0.58885 vicinity.
Last Friday saw more lower price action and this has been followed by rather consistent bearish movement the past few days. The current price of the NZD/USD is around 0.58190, which is a fresh near-term low as mid-term depths come into sight. The 0.58000 level is certainly being looked at a support level. Day traders looking for quick hitting lower moves today and tomorrow should likely not get too ambitious with their selling quite yet.
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New RBNZ Governor and U.S GDP Reports
The Reserve Bank of New Zealand announced a new Governor will take over in December of this year. Dr. Anna Breman who is from Sweden will take the helm at the RBNZ and try to bring order to an institution which has been in open confrontation with the New Zealand government in recent months regarding inflation and interest rate policy. The NZD/USD didn’t react particularly well to the naming of Anna Breman yesterday or early today.
However, the move lower in the NZD/USD may have more to do with USD centric trading. The Fed’s interest rate cut last week was widely anticipated. The Fed while saying it will likely cut interest rates in October also, then put a rather cautious shadow over further mid-term policy – bringing up the word uncertainty again. Today the U.S will release GDP numbers via growth and price index reports. These numbers could cause some volatility in Forex if there are surprises.
Lower Depths and Thoughts About a Reversal
Folks who believe the NZD/USD has to start reversing higher and hold onto value may be in for a rough ride short and near-term. The ability of the NZD/USD to remain stubbornly below the 0.59000 level since last Thursday is an indicator not all is well in the New Zealand Dollar.
- The currency pair is essentially trading near value it touched in the last week of August.
- Day traders of the NZD/USD need to remain cautious about leaning into a position too hard, risk taking tactics should include realistic targets and an ability to get out of trades efficiently.
- If the U.S GDP Price Index meets expectations today, choppy sideways trading will likely continue.
- If the inflation numbers are weaker than expected this could help boost the NZD/USD in the near-term with some buying impetus.
NZD/USD Short Term Outlook:
Current Resistance: 0.58210
Current Support: 0.58160
High Target: 0.58380
Low Target: 0.58010
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