NZD/USD is moving lower in tandem with AUD/USD due to the rise in USD, which quickened its decline that was started 2 weeks ago due to a surprisingly dovish RBNZ who threatened to embark on rate cuts on top of revealing that they were actively intervening in the market. Governor Wheeler must be glad to see NZD/USD breaking the rising channel that has been in play since July 2012, with price heading towards the confluence between Kumo Bottom (senkou span B) and the multi year rising trendline, which is close to 0.80 round figure.
That is a lot of significant support lines for the bears to bash through. Looking at current Stochastic readings, there remains a chance that price may actually rebound from 0.80 as the previous Stoch trough occurred when price was testing the rising trendline. Given that Ichimoku Kumo remain bullish, coupled with the buoyancy provided by the Kumo itself, do not be surprised if bulls actually manage to pull something out of their hat and trade higher after tagging the trendline.
From a fundamental perspective, there may be good reason for price to rally. The latest RBNZ Inflation forecast wasn’t as bad as what the market suspect it would be, suggesting that fundamentals in NZ may still be strong. Furthermore, we’ve just noticed a sharp 5% decline on the Nikkei 225 index today. Though newswires pin the blame on the dismal Chinese Manufacturing PMI, the more likely reason is that bullish optimism/euphoria is now over for Japan stocks and USD/JPY. Is this going to spill over to US Stocks later today? Only time will tell. But certainly if US stocks start to unravel, it is likely that USD will weaken as well, thus allowing NZD/USD to rally higher from here.
GBP/USD – Falls Sharply to Two Month Low Near 1.50
AUD/USD – Falls Through Long Term Support Level of 97 Cents
EUR/USD – Drops Sharply Towards Key Level at 1.28
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