NZUSD Crashes Post RBNZ Intervention Data

NZUSD Crashes Post RBNZ Intervention Data

By: Simon Furman | Where To Trade | On:29-09-2014 00:32
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Key Highlights

  • New Zealand dollar was trashed, as it traded more than 100 pips lower within minutes after the Reserve Bank of New Zealand reported that the central bank sold around NZ$521 million in August in intervention.
  • Other pairs AUDUSD was also affected after the release, as the pair traded below 0.8700 level.
  • US dollar continued to rise against the Canadian dollar, and looks set for a test of the 1.1200 level in the near term.
  • EURUSD holding the 1.2650 support area, and looks like it might attempt to test the 1.2720 level during the Asian session.

NZDUSD

This week started on a negative note for the New Zealand dollar, as the Reserve Bank of New Zealand published a report during the Asian session, which reveal that the central bank sold around NZ$521 million in August in intervention. This did not go down well with the New Zealand dollar buyers, as the NZDUSD pair was sold aggressively. The pair collapsed from the high of 0.7867 to 0.7711 low. So, the pair traded more than 150 lower in a couple of hours. This was one of the worst declines in the recent times for the pair. Technically, there was a trend line on the hourly chart, which was holding the downside. It was broken right around the release time. So, technical combined with the fundamentals ignited a selling rally in the pair.

Intraday Support Level – 0.7710

Intraday Resistance Level – 0.7780

  • Overall, as long as the pair stays below the broke trend line more losses are possible.
  • One might consider a small sell position around the 38.2% fib level of the last drop.

NZDUSD

If the pair manages to climb higher, then the broken trend line might act as a hurdle. The most important thing is that the highlighted trend line is also coinciding with the 50% fib retracement level of the last drop from the 0.7956 high to 0.7711 low.

USDCAD

There were some other currencies affected as a well, including the Australian dollar and the Canadian dollar. The USDCAD pair was seen trading higher during the Asian session. However, we need to understand that the pair is around the extreme levels and almost all major indicators are pointing extreme. So, there is a chance of a recovery in the short term. There is a bullish trend line on the hourly chart, which might act as a catalyst for the pair moving ahead. If the pair corrects lower, then it might find support around the 50% fib level of the last leg from the 1.1089 low to 1.1174 high.

Intraday Support Level – 1.1130

Intraday Resistance Level – 1.1175

  • Any correction might be seen as a buying opportunity.
  • 1.1100 is a key pivot in the coming session, and must hold for more upside.

There is even a chance that the pair might not correct lower and trade above the recent high of 1.1174. If that happens, then a move towards the 1.1200 would be on the cards. A lot depends on how the US dollar trades during the upcoming sessions.

Simon Furman

Simon Furman

Think Global - Act Local

Simon Furman is one of the best financial analyst with 27 years of trading experience

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