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NZD Higher on AUD and JPY Weakness

by on November 22, 2013 2:09 am GMT
 

The kiwi rebounds higher as its neighbor currency fell down a steep flight of candlestick stairs as the Reserve Bank of Australia’s Governor Glenn Stevens said that potential foreign-exchange intervention could be on its way. Steven’s said that “we remain open-minded on the issue. Our position has long been, and remains, that foreign exchange intervention can, judiciously used in the right circumstances, be effective.”

The Japanese yen is also facing the longest set of weekly declines as the Bank of Japan’s policies continue to promote yen selling and yields drop as bonds remain in demand.

The Kiwi prevailed as the only major pacific currency able to catch a rebound against the recent dollar strength. NZDUSD fell early on the session but rebounded vehemently, whereas the Australian dollar lingers at the bottom of the selloff and the yen continues to fall.

The NZDUSD almost reached the lows of .8167, but the pair rebounded quickly as demand for the currency shot the pair up over 70 pips. Price action resistance is present at .8240, while the 23.8 percent Fibonacci level will provide further resistance at .8256.

However, there looks to be a bearish “golden cross” with the 50 day EMA converging into the 200 EMA. As long as NZDUSD remains unable to break key resistance, the bearish cross will likely drag the pair further down to retest the monthly low.

4H Chart NZDUSD

4H Chart NZDUSD

The daily chart shows that price action is roughly midline with the yearly high and low. Upside potential remains at .8256 which is just under the 50 EMA on the daily chart and 23.8 Fib. on the 4H chart. Technical indicators still indicates weakness in the pair.

A break of the low (represented on the daily chart) could open up a .8063 target on NZDUSD.

Also, the Reserve Bank of New Zealand (RBNZ) Asst. Governor John McDermott said the kiwi is currently overvalued. The RBA and RBNZ continue to attempt a talking down of their currencies as economy woes are present in each country. McDermott said he “would like to see a lower exchange rate,” and that the kiwi is still historically high.

Both currencies are expected to continue to trade lower.