NZD/USD Dips Below 0.6800, Reversal From 50-DMA Gains Momentum
Global risk-off sentiment is hurting commodity-linked currencies, including the kiwi, with the NZD/USD pair now dropping back below 0.6800 handle to currently trade near session low.
The pair on Wednesday extended its recovery from the vicinity of 200-day SMA and surpassed 100-day SMA with ease. The pair, however, lost upside momentum and reversed sharply after tapping 50-day SMA resistance near 0.6835 region.
The pair ignored a better-than-expected rise of 3.4% for the Global Dairy Trade Price Index, indicating rise in dairy prices during the latest global auction for second consecutive week.
Later during the day, investors will focus on the releases of two employment indicators from the US - ADP report and weekly unemployment claims, on Thursday ahead of the key NFP data on Friday. Moreover, traders seem to have turned cautious ahead of next week's RBNZ monetary policy meeting. Markets already seems to prepared for a 25bps of rate cut, which would the benchmark interest-rates down to 2.00% from current 2.25% and depreciate the NZD/USD pair sharply.
Technical levels to watch
From current levels, 0.6760 seems to provide some immediate support, below which could immediately slide to a strong horizontal support near 0.6735. Sustained weakness below 0.6735 support could further get extended below 0.6700 handle, towards testing 200-day SMA support near 0.6655-50 region.
Meanwhile on the upside, 50-day SMA near 0.6835 region remains immediate resistance to conquer, which if cleared decisively seems to boost the pair back towards reclaiming 0.6900 handle and head towards testing 0.6920 horizontal resistance.