A rise in risk aversion pushed the NZDUSD lower this week, and slipped to a fresh low for the year, and the New Zealand dollar is likely to face increased selling pressures over the following week as the RBNZ is widely expected to lower the official cash rate by 75bp to 2.75%.
Currency Pair: NZD/USD
Chart: 60 Min Charts
Short-Term Bias: Bearish
Analysis Update
The NZDUSD pulled back after reaching an intraday high of 0.5052 during the overnight session however, as market participants expect the U.S. economy to post its biggest drop in employment since 1949, economic headwinds may push the pair higher over the remainder of the session. Nevertheless, as investors price-in a rate cut by the RBNZ, I expect the pair to hold its bearish trend over the near-term, and we may see the kiwi-dollar test the March low of 0.4894 for support over the following week as investors continue to curb their appetite for risky assets. However, the fundamental event risks scheduled for the next 24 hours may call for a change in our outlook.
Analysis
A rise in risk aversion pushed the NZDUSD lower this week, and slipped to a fresh low for the year, and the New Zealand dollar is likely to face increased selling pressures over the following week as the RBNZ is widely expected to lower the official cash rate by 75bp to 2.75%. After reaching a high of 0.6086 in December, we saw the pair break below the February low earlier this week to reach 0.4894, and the kiwi-dollar is expected to hold its bearish trend over the near-term as the reserve currency continues to benefit from safe-haven flows. Over the next few hours of trading, we may see the pair continue to push higher from the March low however, as the RSI approaches overbought territory, gains are likely to be capped, which could lead the NZDUSD to cover the gap from the 120 SMA. Meanwhile, as the U.S. economic calendar is expected to show a 650K drop in payrolls, deteriorating fundamentals could weigh on the appeal of the greenback as the world’s largest economy faces a deepening recession. Be sure to check out other Technical Reports from DailyFX for additional information on the major currency pairs.
To contact the author of this article, please email: dsong@fxcm.com
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