- NZD/USD ignores bullish relative strength index (RSI) divergence and continues losing altitude.
- The pair dropped to 0.6769 – the lowest level since May 2016.
- Monetary policy divergence at play along with trade fears.
The NZD/USD has hit a fresh 25-month low of 0.6769 a few minutes ago, ignoring signs of intraday bullish reversal.
The hourly chart showed a bullish price-RSI divergence a few hours ago. So, a minor corrective rally was expected, but never happened courtesy of growing monetary policy divergence.
The Reserve Bank of New Zealand (RBNZ) kept the overnight cash rate (OCR) unchanged at 1.75 percent and signaled readiness to act if conditions sway from its expected path. Meanwhile, the Fed raised rates by 25 basis points earlier this month and signaled faster rate hikes.
Further, trade war fears are likely keeping the Kiwi under pressure. China is increasingly favoring a weaker Yuan as that would help the economy absorb shocks from Trump’s trade war. The weakness in Chinese currency could be adding to the bearish pressure around NZD and AUD.
Looking ahead: Corrective rallies will likely be short-lived, courtesy of monetary policy divergence.
NZD/USD Technical Levels
Resistance: 0.6810 (session high), 0.6844 (5-day moving average), 0.6873 (10-day moving average).
Support: 0.6717 (61.8% Fib R of August 2015 low – July 2015 high), 0.6675 (May 2016 low), 0.66 (psychological level),
Share
