NZD/USD: Immediate downside target is 0.7350 - Westpac

Imre Speizer, Research Analyst at Westpac, explains that NZD/USD finally ran out of steam at 0.7550 while the speculative longs are at a five year high - very stretched and immediate (technically derived) downside target appears to be 0.7350 for the pair.

Key Quotes

“In addition, we have the RBNZ MPS this Thursday, which could pour some cold water over the kiwi. Economic data since the previous MPS argues for a lower OCR track, and the elevated NZD could see the RBNZ ramp up its currency warning. The immediate (technically derived) downside target is 0.7350, with a break below possible if the RBNZ is dovish enough.”

“Three months ahead: Our medium term outlook for NZD/USD is largely dependent on the outlook for the US dollar. A persistent rebound in the US dollar by year end is needed to pull NZD/ USD back to the 0.69 area. On that score, last week’s jobs data-inspired USD bounce is encouraging.”