The NZDUSD has finally started to come off its recent highs following Wednesday’s dovish hints from the FOMC. I mentioned the break below trend line support on September 13th, and although buyers were more resilient than anticipated, we can clearly see that those bids are beginning to dry up.
So where to next?
As noted last week, the 0.7200 handle is the one to watch as we head into a new week of trade. A failure to hold as support would open the door for a larger move toward the June and July lows near 0.6967.
To clarify, 0.7200 is a zone that extends as high as 0.7210 to include the lows from August 22nd and July 12th among others. Nevertheless, this area does appear to be the line in the sand so to speak between buyers and sellers.
Notable event risk for the US dollar next week includes various speeches from FOMC members on Wednesday followed by third-quarter GDP on Thursday at 8:30 am EST. The New Zealand dollar, on the other hand, should enjoy a relatively quiet week, at least in terms of scheduled event risk.
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