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NZD/USD in accumulation phase, selling rallies favoured


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FXStreet (Bali) – NZD/USD is trading within an accumulation phase after the sharp losses suffered last week following the more dovish-than-expected stance by the RBNZ.

The New Zealand Dollar has been losing value consistently for the last 2 weeks, down more than 5 cents since topping out circa 0.7850 on Jan 16, as the market started to price in a more dovish RBNZ in response to lower NZ CPI readings, with last Thursday’s Central Bank policy decision confirming the dovish assumptions. The RBNZ dropped its explicit tightening bias, while leaving the doors wide open for a potential rate cut in the months to come, making the outcome data/inflation dependent.


Technically, after the clear break through the 38.2% fib retracement (0.7330) from post GFC rally last week, there is no much support until faced with 0.70 round number, with the spec community now looking to capitalize on the short positions accumulated since early Oct last year, time when the pair entered 3-4 months of range-bound trade. While some minor corrections should not be discarded, sellers are likely to await on intraday rallies to reinstate shorts, with 0.7330 and 0.74 immediate resistance now.