FxWirePro: NZD/USD halts upside, 'Death Cross' formation raises scope for downside

Technical Analysis:

• NZD/USD reverses a dip to 0.6971, rebounds in Asia, retakes 0.70 handle.
• 'Death Cross' (50-DMA and 200-DMA) evidenced on daily charts, raises scope for downside.
• The pair has slipped below 5-DMA at 0.6995, break below 20-DMA at 0.6944 will confirm bearish bias.
• We then see scope for test of channel base at 0.6750.
• On the flipside, break above 200-DMA at 0.7080 will see test of 0.7174 (50% Fib of 0.7485 to 0.6862 fall).

Fundamental factors:

• Rebound in commodities’ prices coupled with higher Asian equities, provide some stability to markets and boost the demand for the higher-yielding currency NZD.
• President-elect Trump’s presser tonight will be watched by markets for more information on the proposed US infrastructure spend.
• On the data front, New Zealand will see ANZ CommodityPrice Index and electronic card retail sales (12, Thursday).
• Worth following from the US docket this week are jobless claims (12, Thursday) and retail sales, PPI (13, Friday).

Support levels - 0.6944 (20-DMA), 0.69, 0.6885 (Jan 3 low)

Resistance levels - 0.70 (23.6% Fib of 0.74854 to 0.68621 fall), 0.7062 (50-DMA), 0.7080 (200-DMA)

Call update: Our previous call (http://www.econotimes.com/FxWirePro-NZD-USD-eyes-200-DMA-at-07080-good-to-go-long-on-dips-480297) has hit TP1. Further targets are at risk.

Recommendation: Good to exit at highs. We would prefer to take a short on break below 20-DMA.

FxWirePro Currency Strength Index: FxWirePro's Hourly NZD Spot Index was at 19.0443 (Neutral), while Hourly USD Spot Index was at 56.8414 (Slightly bullish) at 0530 GMT. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex.