Even though there was a slight bounce last week, it is tough to be bullish on the kiwi in general currently. The only plausible reason I can think of is perhaps AUD/NZD might be overdue for a correction. Otherwise, the kiwi might be in for more pain moving forward.
In the case of NZD/USD, the pair had been testing the key daily moving averages as of late. And that includes after the more dovish RBNZ last week. It saw a test of both the 100 (red line) and 200-day (blue line) moving averages at the time.
And today, sellers are finding slightly more conviction to test waters below that. There were already several attempts to break the key support region at the end of June and early July. But ultimately, the key technical levels held up.
Right now, the lows around 0.6047-57 are also in focus. So, a firm break below the key daily moving averages and that final support threshold is likely to result in a stronger downside break for NZD/USD.
The first target is likely the 0.6000 mark but the pair might find it tough to find much support considering recent factors in play.
For one, the RBNZ is now among the more dovish central banks when put up against the RBA and Fed in particular. Then, we have China woes continuing to weigh with the yuan slipping once again in trading this week. The US CPI report and stimulus hopes helped to pin USD/CNY back to 7.250 at the end of last week but the pair is now back up to 7.265 on the day.
That is not to mention the fresh breakout in AUD/NZD to its highest levels since October 2022, which is a rather overlooked factor I would say.
