NZD/USD buyers have to rely on a capitulation in the dollar to survive
Otherwise, it only feels like it's a matter of time before we test the year's low of 0.6545 once again. The highs in late August formed a double-top pattern around the swing region just under resistance @ 0.6734 and since then, it's been a steady move lower for NZD/USD.
The break of the trendline support last week only helped to accelerate losses in the pair and now the key support handle will be the 0.600 level. For buyers, stay above that and there may be some hope of near-term reprieve. As for sellers, a close below that and the year's lows will very much be the next target.
The 0.6545 level also coincides with the low seen on 16 February 2016. That helped to limit the decline seen in early-to-mid August for the pair.
For NZD/USD to survive further tests lower it has to rely on the dollar falling. Because fundamentally, the kiwi faces that same headwinds to its neighbour and the main thing being a flagging economy as well as a central bank that isn't sure if the next rate decision will be a hike or a cut. And the limbo in the latter factor is what has been a big drag on the kiwi in 2018, much like the aussie.
So, as long as that persists, expect more weakness in NZD/USD to come as long as the dollar doesn't implode.
