NZD/USD slips to 0.7310
Daily outlook - NZD/USD slips to 0.7310
- An early hours of Wednesday’s trading session confirmed that the Kiwi was rapidly depreciating against the buck in a flag pattern.
- For this reason, the currency rate has expectedly bounced off from the weekly S2 at 0.7310.
- Most probably, the surge would continue at least until the 0.7348 mark.
- A number of major technical indicators support this assumption, pointing out that the pair is oversold. However, then the rate will have to encounter the 55-hour SMA, which might force it to step down.
- If this scenario materializes, this might be a sign of formation of a falling wedge.
- In contrast, if the pair succeeds to pass through it, that will confirm the relevance of the current descending channel.
- But, generally, the pair is expected to continue to slip to the bottom, as 71% of traders hold short positions.
The way the currency pair moved yesterday slightly exceeded general expectations. After jumping from the weekly S2 at 0.7310, the rate, indeed, reached the 0.7348 mark. But then it went even further and surged towards a combination of the 100-hour SMA and the weekly S1 at 0.7363.
Despite such success a reaction of traders on a speech delivered by the RBNZ Governor Wheeler drove the currency pair down by 80 basis points. For this reason, the rate found itself out of the pattern and below the monthly S1, which is located at the 0.7294 level.
Most probably, the pair is going to attempt to restore some of the lost positions, step by step trying to bypass the above resistance barriers. But even if it succeeds in this endeavour, the result most likely is going to have a short-term effect.