NZD/USD bears are in the market but a correction could be underway soon.
The US Dollar is firm again on central bank divergence themes.
NZD/USD is trading a touch lower on Thursday as the US dollar continues to make tracks to the upside on yet more positive data this week as an improvement to last week’s. At the time of writing, NZD/USD is down some 0.1% after falling from a high of 0.6102 to a low of 0.6050 so far.
Weekly Initial Jobless claims that decreased 26,000 to a seasonally adjusted 239,000, the largest drop in 20 months and below the expectation of 265,000 by economists polled by Reuters. Federal Reserve’s Chair Jerome Powell also indicated the central bank is likely to resume its rate hike path and this is weighing on NZD.
”Bond markets have been far more volatile, and FX price action has been comparably tame by comparison, with gains in equities and oil preventing the USD from totally dominating,” analysts at ANZ Bank explained.
”US data has been impressive and may keep the USD elevated for longer than many are forecasting, but as yesterday’s ANZBO survey showed, confidence is recovering here too, so the outlook for the Kiwi could is very nuanced,” the analysts added. ” The AUD has been a big driver of late, and in the absence of specific NZ drivers, will be key again as we head into the Reserve Bank of Australia meeting on Tuesday.”
NZD/USD technical analysis
The monthly chart shows the price has broken the support structure that is now acting as resistance. Therefore, lower levels can be expected for the month ahead.
The weekly chart shows the price rejected fully by the resistance and a downside extension could be on the cards on a break of 0.6060 old support looking left.
The daily chart’s downside impulse may have more to run but a Fibonacci drawn on the current range sees the 50% and 61.8% ratio aligned with prior supports.
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