Glimpse through technical and fundamentals: Technically, NZDUSD intermediate bulls test support at 50% Fibonacci retracements from the highs of 0.7558 levels. Ever since then, sharp rallies have gone above 7EMA.
Your keen observation is needed to figure out the price behavior that is stuck in the range between 50% Fibos and 21EMA. The current rallies are now struggling to break-out this significant resistance of 21EMAs, even if it does it may drag rallies up to another 100-150 pips maximum where it tests another stiff resistance levels.
If you plot the monthly chart of this pair, you would probably be convinced about the bearish strength in the long run. We could foresee bearish targets up to 0.68 levels upon failure swings at 0.7099 (21EMA).
Fundamentally, The Kiwi is expected to lose its pole position in terms of offering the highest central bank policy rate in G10 next year, and this should keep the currency a laggard.
The government is also reviewing the RBNZ's mandate with the intention of inserting "maximum employment" as a second mandate alongside price stability and moving to a committee structure for monetary policymaking. The RBNZ is therefore expected to stay on the sidelines through 2018 in the face of the institutional changes and countervailing fiscal effects.
Bearish scenarios: NZDUSD forecasts of the slide below 0.68 is majorly driven by:
1) The housing market slowdown becomes disorderly
2) The migration rolls over due to a shift in government policy;
3) NZ bank funding issues intensify, causing the market to question NZ's ability to attract capital inflow.
On hedging grounds, we recommend shorting futures contracts of mid-month month tenors as the underlying spot FX likely to target southwards 0.68 levels in the medium run.
Writers in a futures contract are expected to maintain margins in order to open and maintain a short futures position.
Currency Strength Index: FxWirePro's hourly NZD spot index is inching towards 56 levels (which is bullish), while hourly USD spot index was at -170 (highly bearish) while articulating (at 06:48 GMT). For more details on the index, please refer below weblink:
http://www.fxwirepro.com/currencyindex.
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