The
Kiwi (New Zealand dollar - NZDUSD) broke out of what was a bearish pennant
formation in Technical Analysis overnight, to the downside. This is consistent
with its gradual reduction from the highs of July and the comments of the
governor of the Reserve Bank of New Zealand at the last interest rate rise
announcement, on July 23rd. when he said:
“With
the exchange rate yet to adjust to weakening commodity prices, the level of the
New Zealand dollar is unjustified and unsustainable and there is potential for
a significant fall”
Now
we cannot always give credence to Central Bankers when they attempt to jawbone their
currencies into depreciation, but in this case we also believe that the RBNZ
has helped the situation along by possibly intervening directly in the Forex
market (see Kiwi
intervention by RBNZ?)
Support level looms large
Now
price in Kiwi is approaching support at 0.84, and this is also a nice round
number. It has already broken through its 200 Day Exponential Moving Average
(EMA), which is bearish, but it could be held up here at this support level.
Further
comments by the RBNZ would have the effect of sending it on its way down, but a
delay at this support level could also be on the cards, as these levels are
watched and respected by a great number of market participants.
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