Kiwi under pressure on the day after poor data
Lowest business confidence in a decade was enough to send the kiwi tumbling on the day across the board and the technical picture now doesn't paint a pretty one. With the RBNZ also struggling (weighing between a rate cut and a rate hike), the outlook for the kiwi doesn't look all too bright if economic prospects are also quickly vanishing.
As for price action, the soggy reading above sent NZD/USD falling below the 100 and 200-hour moving averages. That now puts the near-term bias in favour of sellers. What's more, the pair even broke below the near-term support trendline as well.
That only further reinforces the near-term bearish bias if anything else. So, what's next for the pair?
As the bearish bias grows, this means that there is still more downside to come for the kiwi over the medium-to-longer-term as the outlook remains soggy.
Looking at the bigger picture, the highs this week stalled in the swing region just below the 61.8 retracement level @ 0.6734. Buyers have been unable to force a move higher since and with poor data now, the near-term bullish conviction is all but thrown out the window.
Price is currently testing the 38.2 retracement level @ 0.6662, with further support only seen at the 100-bar MA on the 4-hourly chart @ 0.6645. Further support is then seen at the Friday lows @ 0.6637 and 0.6620 (hourly chart).
But given poor data and a soggy outlook, the conviction for a long kiwi trade is a tough one to chew into over the longer-term. The only near-term reprieve I can find for the kiwi is that against the yen there is still some support that may help underpin the kiwi:
Although price has broken below the 100-hour MA (red line), the trendline support remains intact still. That should help provide the kiwi some relief in the near-term if it manages to hold. That said, the trading bias since the middle of the year remains to fade any kiwi rallies still in my view.
