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29 Jul 2014
NZD/USD: More cracks in the bullish foundation - JPMorgan
FXStreet (Bali) - Niall O'Connor, FX Strategist at JPMorgan, notes that NZD/USD has confirmed a short term top with corrective retracements viewed as selling opportunities.
Key Quotes
"This week’s sharp under-performance for NZD is another sign that the backdrop for the commodity currencies has deteriorated. This follows the failure to extend above critical medium term resistance at the .8845 cycle high from 2011."
"With the decline taking on a clear impulsive bias and the post-RBNZ extension leading to a break of the key support levels in the .8642/70 zone, the downside risks are clearly on the rise."
"While the next line of support levels in the .8550/.8455 zone (Feb uptrendline/200-day moving average) can allow for a near term bounce, corrective retracements are viewed as selling opportunities."
"The .8650/.8720 resistance and recent breakdown levels should now maintain the short term downside risks for a closer test of the critical .8413/00 zone. This area represents the June low and the uptrendline from the September ’13 low."
"As important, the setup on the crosses also suggests further underperformance given the impulsive rallies for EUR/NZD and AUD/NZD. Note that we maintain a long EUR/NZD trade recommendation."
Key Quotes
"This week’s sharp under-performance for NZD is another sign that the backdrop for the commodity currencies has deteriorated. This follows the failure to extend above critical medium term resistance at the .8845 cycle high from 2011."
"With the decline taking on a clear impulsive bias and the post-RBNZ extension leading to a break of the key support levels in the .8642/70 zone, the downside risks are clearly on the rise."
"While the next line of support levels in the .8550/.8455 zone (Feb uptrendline/200-day moving average) can allow for a near term bounce, corrective retracements are viewed as selling opportunities."
"The .8650/.8720 resistance and recent breakdown levels should now maintain the short term downside risks for a closer test of the critical .8413/00 zone. This area represents the June low and the uptrendline from the September ’13 low."
"As important, the setup on the crosses also suggests further underperformance given the impulsive rallies for EUR/NZD and AUD/NZD. Note that we maintain a long EUR/NZD trade recommendation."