The NZDUSD is coming off a 340 pip slide that started April 13. In similar fashion to that of the EURUSD, GBPUSD and especially the AUDUSD, the New Zealand dollar has felt the effects of a strengthening USD.
As for the NZDUSD, the seven-day losing streak broke a significant support level. The 0.7180 handle served as the lower boundary for a 260 pip range that began in February.
However, the April 23 close brought an end to the sideways movement. It also exposed the next key support at 0.7050/60, which is an area I’ve had my eye on for quite some time.
Although you could try to buy the pair down here, I think the safer and more favorable play is to sell a retest of the 0.7180 area as new resistance. Whether or not buyers can manage a retest of this area is unclear, but that’s how I’m going to approach this.
Not only is 0.7180 a well-defined horizontal level, but it’s also very near the 38.2% Fibonacci level when measuring from the April 13 high to today’s low. This makes the area a bit more appealing to those interested in shorting the NZDUSD.
As you’d imagine, key support comes in at 0.7050/60. It’s going to take a daily close (using a New York close chart) below that to open the door to the next support at 0.6960.