NZD/USD trades at the lows, 0.7253 currently
When the kiwi started the day yesterday, all was bright and rosy. Fast-forward a day or so, and things are now looking rather bleak again for the currency.
Trump's call for additional tariffs against China has weighed a bit on sentiment in the currency market, and commodity currencies are so far the leading casualties from that - with the kiwi the laggard on the day.
The failure to firmly break above the 27 March high at 0.7304 sees NZD/USD then fall back below the trendline resistance and now it appears that a move to the downside is more likely.
If that's the case, what are the key levels to look out for?
The key support level for the pair is the 38.2 retracement level @ 0.7187. It has been an area which has stalled the decline in the pair on four separate occasions so far this year. More recently, there was added support in the form of the 200-day MA (blue line) too.
That will be the area to look out for, and at the moment the 100-day (red line) and 200-day (blue line) are starting to converge near there so it will be a confluent of support levels for the NZD/USD when it touches that area.
Previous bounces off the 38.2 retracement level has seen the pair test the 0.7300 level at the very least, but a test to the downside this time around will be even more crucial with all the support levels bunched up together. If anything, I'd argue that the pair is more vulnerable to a break to the downside this time around. Break one level, and the rest falls apart as well.
