The New Zealand Dollar held critical support, sparked by hotter than expected inflation data. NZD/JPY rates have rebounded from the uptrend from the March 2020 and January 2022 lows, while NZD/USD rates are off their yearly lows.
With global equity markets rallying in recent days, the New Zealand Dollar has benefited as a high beta currency. But the more important development this week was, which showed price pressures staying stubbornly elevated despite the Reserve Bank of New Zealand’s aggressive rate hike efforts this year.
rates gaining momentum as the early-October high was breached. Resistance lies ahead near 84.69, the 76.4% Fibonacci retracement of the 2014 high/2020 low range, which has short-circuited rallies multiple times throughout this year.rates have rebounded off of yearly lows last week, setting up a countertrend move. But the downtrend from the August and September swing highs remains in place, suggesting it is too early to claim that the thrust lower has been completed.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests NZD/USD prices may continue to fall. Positioning is less net-long than yesterday but more net-long from last week. The combination of current sentiment and recent changes gives us a further mixed NZD/USD trading bias.