NZD/USD: on a break of key DXY support, bulls seek out R2 and the 23.6% fob at 0.6489
- NZD/USD has found some demand on the back of the dollar's softness with there still being very little to hold the bird.
- R1 was looked at and the Kiwi has parked just below with little deterioration in the climb, not even in the shorter-term time scales.
The US dollar came back from its highs up at 96.16 and trickled down to test the 96.95 support and trend line where the pair sits currently. The rejection has left a troublesome looking bear shadow on the daily candlestick, albeit a number of days too short to be classified as a shooting star and bearish reversal stick. Nonetheless, bears are determined and this gives rise to a recovery in the commodity complex, (CRB index holds above the 200 psychological mark).
Another attempt to break higher could be on the cards
Analysts at ANZ Bank New Zealand noted that the USD generally pared back gains overnight, after the halt in the bond market rout explaining that this has seen kiwi move a touch higher, but not enough to break resistance. "Unless we see a resurgence in volatility, another attempt to break higher could be on the cards, although we maintain a downward bias over the medium term."
Key event for the week: US CPI - Nomura
NZD/USD levels
- Support 0.6350. Resistance 0.6480.
It appears to be the end of the steep decline for now judging by the price action emphasised with a daily and weekly bullish daily spinning top. RSI has headed higher towards overbought territory on the hourly sticks, 4hr RSI is neutral while daily RSI is turning higher and away from oversold which all stacks up for a continuation of a minor recovery in the NZD/USD to at least a toe dip into the 0.65 handle - Just above 0.6489, the 23.6% Fibo of the decline from the 21st Sep highs at 0.6999 to the recent extension lows of 0.6424. S3 at 0.6365 meets the bottom of the descending daily channel. However, the monthly charts are more indicative of a continuation to the downside, with RSI headed south towards 30 with chars in a sea of red and no obvious indication of any sustainable let-up.