NZD/USD: technically bearish although US dollar could be entering multi-year downturn

Currently, NZD/USD is trading at 0.7430, up 0.02% on the day, having posted a daily high at 0.7433 and low at 0.7427.

NZD/USD is consolidating the fall from the 0.7450's after the US dollar flexed its dwindling muscles in the latter half of the US session. Commodity currencies had otherwise been performing well with a rebound in metal prices and WTI shooting up through the $49 handle to highs of $49.75. 

There is no NZ data due for today, although the RBA's SOMP could be a factor in Kiwi's performance and flows in the cross could impact, (AUD/NZD broke up and out of the 1.06-1.07 consolidation on the back of weaker than expected NZ labour market data earlier this week). Analysts at Westpac noted that the bird has been slipping lower in recent days and remains vulnerable in the near term. 

U.S. dollar may have entered multi-year downtrend - Wells Fargo

NZD/USD 1-3 month:  

Further out, the analysts at Westpac explained that there are stretched technical indicators and stretched long positioning that argues for a decent downward correction. However, the analysts added that until the broad US dollar starts to recover from its seven-month old decline, the NZD can remain elevated. "Eventually if the Fed’s normalisation cycle pushes US interest rates and the US dollar higher, NZD/USD could fall to 0.6800 by year end (28 July)," noted the analysts at Westpac.

NZD/USD levels

To the upside, 0.7430/40 ahead of key 0.7480 is the near-term resistance area. 0.7520/25 double top highs are ahead of the 21st July high at 0.7557. On follow through, 0.7744 were the April 2015 highs ahead of the opening highs for that year at 0.7889. To the downside, 0.7400, 0.7386, 0.7280, (11th July high), 0.7205/06 June 22/21 lows; 0.7186 June 15 low; 0.7150 June 5 high; 0.7127 June 6 low. On the wide, on a break below 0.7080/00 opens 0.6970.