To some extent an unexpected rate cut by the Reserve Bank of New Zealand on Thursday, although some economic forecasters had signalled a cut possibility. This action, alongside the perception of still more dovish forward guidance encouraged the significant sell off, that the charts had been pointing to anyhow.
NZDUSD Downside Targets
Despite being poised into the RBNZ Meeting on Thursday, we did maintain out bearish stance, stating in our last report to clients that “the break below .7069 last week leaves the bias (for now) still lower through mid-June”.
Moreover, the effective bear gap after the RBNZ rate cut, between .7200, with the bottom of the gap in the .7081/83 area on our charts, leaves a more bearish tone into Friday and for June.
More notably, the push below the psychological/ option level at .7000 to probe into 2010 monthly support area at .6988/49 has set a far more bearish outlook.
- We see a downside bias for .6963 and .6949; break here aims for .6900.
- But above .7037 opens risk up to .7081/83, which we would look to try to cap.
Short/ Intermediate-term Outlook – Downside Risks:
- We see a negative tone with the bearish threat to .6949.
- Below here targets .6870, with threat lower for .6562.
What Changes This? Above .7272 eases bear risks; through .7396 signals a neutral tone, only shifting positive above .7564.