NZD/USD: under pressure at 0.7250 in risk-off sentiment

NZD/USD is under pressure ahead of the Tokyo open in early Asia today following a bout of risk aversion that sent the commodity bloc lower in the U.S. session. NZD/USD was trading a few pips shy of the 0.73 handle before plummeting to 0.7236 where it recovered to some extent before drifting back to current levels.

"Broadly speaking, in a “muddle through” world, with the local economy strong and yields high, that portends of a firm NZD, not a weaker one," suggested analysts at ANZ, adding, "However, we’re wary of chasing the NZD at current levels but neither can we present a case for a material or sustained push lower. Volatility and bouts of risk of like we’re seeing at the moment (NZD was at ~0.73 at 5am, but was nearer ~0.725 at 7am) are a reminder that the NZD isn’t bullet- proof. Had the NZD not been so overvalued, liquidity was greater and NZ was less export oriented, it’d doubtless be a different story."

Analysts at Westpac offered a 1-3 month outlook for NZD/USD:  "During the month ahead another probe above 0.75 is possible, driven by good NZ economic news, a still-vulnerable US dollar, and yield-chasing inflows. By year end, there’s a case for a correction towards 0.70 if the Fed tightens in December as we expect. (13 Sep)."

NZD/USD near term levels

Current price is 0.7250, with resistance ahead at 0.7253 (Daily Open), 0.7257 (Daily High), 0.7268 (Hourly 20 EMA), 0.7271 (Hourly 100 SMA) and 0.7274 (Daily Classic PP). Next support to the downside can be found at 0.7245 (Daily Low), 0.7244 (Weekly Low), 0.7243 (Daily Classic S1), 0.7237 (Yesterday's Low) and 0.7220 (Monthly Low).