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NZD/USD overstretched to the downside?

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Jan 6, 2016.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

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    FXStreet (Guatemala) - NZD/USD has entered into a phase of consolidation with resistance stemming from 0.6643, the 20 SMA on the hourly chart and moving between there and the overnight low of 0.6626.

    There could be a respite for now on the downside having fallen considerably since the start of this year from above 0.6840 and crash landing to aforementioned lows with little in the way of support on the back of continuing poor economic outcomes in the Chinese economy.

    The GDT price index didn't help the bull's case either yesterday. Amongst all that, the greenback is staging a strong performance ahead of the Nonfarm Payrolls at the end of the week, with today's ADP sighted as a prelude to that main event. A fly in the ointment could be within the FOMC minutes that were on the dovish side from Dec with not all members being totally comfortable with the rate hike while it was documented as a close call.

    NZD/USD levels

    Technically, NZD/USD is en-route for the 100 DMA at 0.6578 while trading below the 50 DMA at 0.6660 in early Asia today. A break to the downside brings in 0.6428 and the Nov low as last defense for a full correction to Aug low of 0.6220. Only a recovery through the 200 DMA at 0.6829 would alleviate the downside pressures and 0.68 may prove to be a strong psychological resistance.
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