- NZD/USD is making tracks back to the downside within the bearish Channel from the resistance area of the same channel and eyes test of S1 in the sessions ahead before the FX week is out.
- NZD/USD is currently trading at 0.6542 from 0.6578 and made a low of 0.6534.
NZD/USD has turned sour in a renewed risk-off environment with Asian stocks contaminating the mood in both European and US markets again which has taken volatility measures to key levels, and when you add USD/CNH trading to new highs above 6.95, then the outlook for EM-FX and proxies such as the antipodes doesn't look too pretty.
"Considering the weakness in equities, the NZD has held up pretty well, although that might be a reflection of the fact that equity weakness has seen US bond yields turn around too. Nevertheless, it is hard to be a buyer of NZD here given the jittery backdrop,"
analysts at ANZ Bank New Zealand argued.
EM-FX: Offshore Renminbi (CNH) also dropped and is once again re-testing lows around 6.95:
Analysts at Rabobank explained that there has been no respite despite the US Treasury not calling China a currency manipulator.
"Other EM FX also had another poor session, of course, with BRL also tumbling on news that the central bank head, Ilan Goldfajn, is going to quit at the end of 2018. The message there perhaps involves “Gold” but everything is clearly not “fajn”. MXN naturally did not fare well on US President Trump tweeting a threat to use the army to close the southern border if immigrant inflows are not brought under control. It smells like mid-term semantics to me, but the damage was done nonetheless."
NZD/USD levels
NZD/USD is building up for a break to the downside of the descending channel and bears can take their cues from the longer-dated charts such as the monthly that is indicative of a continuation to the downside where we are seeing a sea of red still. However, a break of the descending channel's resistance line and 0.66 the figure opens the room to 0.6633 as the 76.4% Fibo target, although, the more likely scenario is an extension of this downside to S3 located down at 0.6455 now once the 50% gives way.
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