The decline in the kiwi today came after the NZ government has moved to enforce restrictions on the housing market to ease prices. The central bank is still off from hiking rates, so perhaps macroprudential measures are the way to go there – in some sense, a more dovish stance.
But again, this is applicable to just one sector/element of the economy.
Nevertheless, there has been some losses in the kiwi with the dollar keeping firmer so far on the day. The US Dollar has come back into favor among leveraged funds, and this perhaps is another reason for big money to keep that momentum going.
Looking at the pair, the change in the technical picture may also be a issue here. The pair is trading down 1% on the day and is breaking a few key support levels now. Noteworthy, the pair is tracking below the trendline support @ 0.7122, the 100-day moving average (red line) @ 0.7124, the 38.2 retracement level @ 0.7101, and the 18 January low @ 0.7096 as we start to move towards European morning trade.
The pair has not really traced below the former besides for a brief period in late October last year. But I would argue that there has not really been a firm break below the key level since May last year – when the kiwi was recovering from the March selloff. As such, breaking below those key levels mentioned above leaves very little room for buyers to make a stand all the way through to 0.7000 next with the 7 and 12 December lows seen in the region of 0.7003-06 as well.
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