NZD/USD: Powell the last hope for Kiwi bulls

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The significant dovish shift from the RBNZ at its August meeting has left the Kiwi dollar on the backfoot, closing Wednesday beneath former support at .5850 and the key 200DMA. With Fed rate-cut pricing already so rich heading into Jackson Hole, only an explicit dovish shift from chair Jerome Powell may be enough to prevent a USD rally. As such, a short NZD/USD setup looks to be on the menu.

Positions could be built beneath the 200DMA with a stop either above it or .5850. A retest and rejection of the 200 would strengthen the case. The 50% fib of the April-July rally sits just above .5800, offering a potential early hurdle. A break beneath that opens the way to .5750, .5700 and .5639, all levels that saw plenty of action earlier this year and screen as potential targets depending on risk-reward.

Momentum indicators are flashing bearish across the board, favouring downside. If price reverses back above .5850 and holds, the bearish bias is invalidated.

Good luck!
DS

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