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FxWirePro: NZD/USD slumps on rising odds of RBNZ rate cuts, break below 200-DMA will accentuate downside

NZD/USD chart on Trading View used for analysis

  • NZD/USD is extending downside on the day after the RBNZ said that an increase in bank capital requirement could lead to an interest rate cut.
     
  • RBNZ's Deputy Governor Geoff Bascand said that the central bank is planning to hike capital requirements for the bank and the resulting tightening of financial conditions could be countered with the help of an interest rate cut.
     
  • NZD/USD down 0.45% on the day at 0.6770 at 0415 GMT, bias bearish.
     
  • The pair now eyes 200-DMA at 0.6751, break below 200-DMA will accentuate weakness.
     
  • Upside is capped at 21-EMA. RSI is below 50, bias lower. Stochastics oscillator is biased lower. 
     
  • Weekly close below 20-W SMA at 0.6750 will confirm near-term downtrend.
     
  • Next major support lies at 0.6685 (Triangle base). Breach there will see test of 61.8% Fib at 0.6632.

Support levels - 0.6750 (nearly converged 200-DMA and 20-W SMA), 0.6685 (Triangle base), 0.6632 (61.8% Fib)

Resistance levels - 0.6813 (21-EMA), 0.6831 (5-DMA), 0.6840 (23.6% Fib)

Call update: Our previous call (https://www.econotimes.com/FxWirePro-NZD-USD-pauses-downside-at-4H-200-SMA-support-at-068-stay-short-on-break-below-1500893) has hit all targets.

Recommendation: Watchout for break below 200-DMA for further weakness.

For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex
 

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