NZD/USD now leans on support from the 200-day moving average
The pair posted a high of 0.6900 on the day in Asian trading as risk sentiment improved but then has been on a continued track lower since. As we began the session, the pair was trading around 0.6880 but has now fallen to lows close to the 0.6850 level on the day.
There isn’t much headlines on the day on risk so far and equities sentiment is still holding up well while the aussie hasn’t really fallen by much either. The kiwi’s drop so far appears to be more technical-related than a fundamental one.
Price is extending to the downside, but it is not really breaking lower. Upside levels remain capped by the 0.6900 handle as well as the 50.0 retracement level @ 0.6910. That has helped to limit any gains in the kiwi seen so far this week.
Meanwhile, the downside move is also limited by support coming from the 200-day MA (blue line) which holds at 0.6851 currently. That is the area where price action is leaning against at the moment.
Looking at the near-term chart, price has now fallen back below the two key hourly moving averages and that exacerbated the decline in the kiwi earlier. But once again, the 200-day MA is proving to be a key support level for the time being in keeping buyers in the game.
So, what’s next for the pair?
The focus will turn towards North American trading where we will have the US November CPI data to come. That will help shape up how risk will trade later in the day and impact the kiwi but the release will also have bearings on the dollar ahead of next week’s FOMC.
For NZD/USD, an upside move relies on it breaking back above 0.6900-10 in order to retest the May high @ 0.6975. Meanwhile, a downside move relies on price falling below the 200-day MA to confirm a break of the bullish momentum seen since the start of November.