NZD/USD Could Be Gearing Up For A Break To New Lows

With less than 24hrs until the RBNZ meeting, NZD remains pressured from trade concerns and soft domestic data. And with recent price action rejecting pivotal resistance, we’re looking for an eventual break to new lows for the year.

The expectations for a policy change remain remote. However, with business conditions continuing to push to multi-year lows RBNZ will likely to reiterate that they’re “positioned to manage a change in either direction – up or down”. Besides, Governor Orr is unlikely to want anything in the statement that deters bearish bets on NZD, having described their falling currency as “a good thing” and “well behaved’ in the past.

Technically the dominant trend remains bearish although a sideways range has developed between 0.6675-0.6850 area this past month. Whilst our bias remains for an eventual bearish breakout, the risk of a bounce higher remains whilst above key support levels. Currently consolidating above a zone of support between 0.6714/25 the next support area awaits around the 0.6675/87 lows. Therefor until a break lower is confirmed, you have the choice of counter-trend / mean reversion trading within the range or fading near the highs if you’d prefer to stick in line with the trend. Failing that, simply wait for the break of 0.6675.

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