NZD/USD Technical Strategy: BEARISH
- New Zealand Dollar confirms break below long-held range floor
- Sellers now seem poised to push for a challenge of the 0.65 figure
- Invalidating bearish cues likely needs foothold in the upper 0.67s
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The New Zealand Dollar managed to secure a break below support in the 0.6699-0.6727 area, confirming the breach on a daily closing basis. Failing in this regard on an earlier foray lower in the wake of disappointing CPI data and then opting to follow through on a second attempt seems to hint at greater potential for further downside progress. The break appears to be a bit more considered, as it were.
From here, the next layer of support appears in the 0.6591-0.6619 zone, with a further move below that opening the door for a test of the 0.65 figure. A reversal back above 0.6727 that is likewise secured on a closing basis would go a long way toward invalidating the immediate downside bias but taking out falling trend line resistance set from the March 21 high (now at 0.6750) seems necessary to re-confirm.
Nearer term, forays above the 0.67 figure may be relatively attractive to a significant crop of sellers from a risk/reward perspective, making lasting progress above that level challenging. A steady stream of macro event risk with potential to encourage market-wide risk aversion might emerge as another factor capping the upside for the sentiment-linked currency.
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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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