NZD/USD Technical Analysis: Deeper Downturn Seen Ahead

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NZD/USD Technical Strategy: Short at 0.7227

• New Zealand Dollar fell to one-month low after dovish RBNZ policy update
• A break of near-term chart support hints at push below 0.72 figure ahead
• Short position re-established after pop on jobs data stops out earlier trade

The New Zealand Dollar has dropped to touch the lowest level in a month against its US counterpart, with a break of near-term chart support warning of deeper losses ahead. The latest push lower comes courtesy of a dovish RBNZ policy announcement, building on an earlier sentiment-inspired breakdown.

From here, a daily close below the 38.2% Fibonacci expansion at 0.7140 opens the door for a challenge of the 50% level at 0.7049. Alternatively, a reversal back above the 23.6% level at 0.7254 sees the next major upside barrier at 0.7434, a swing top marked by the September 20 high.

The NZD/USD short trade triggered at 0.7275 was stopped out on an upswing driven by upbeat employment data, a move quickly unwound as the RBNZ policy call hit the wires. The position has now been re-established at 0.7227, initially targeting 0.7140. A stop-loss will be activated on a daily close above 0.7264.

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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com

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