NZD: Another test lower could be possible - ANZ

Analysts at ANZ are concerned about NZD/USD’s elevated level, particularly in the context of stretched positioning and suspect another test lower could be possible for the pair.

Key quotes

“A number of senior Fed officials highlighted the valuation risks in some asset markets at present. While the NZD was of course not their focus, we’ve certainly been a little more mindful of late about its elevated level, particularly in the context of stretched positioning. After retreating from highs, NZD/USD bounced off support, but we suspect another test lower could be possible.  Support 0.7260 Resistance 0.7320 “

“NZD/AUD: Although dipping modestly overnight, this cross remains range-bound. A lack of Australasian data today leaves it off the radar. We still favour this cross higher over the coming six months given NZ’s economic outperformance. Support 0.9550 Resistance 0.9605” 

“NZD/EUR: ECB President Draghi’s noted that “deflationary forces have been replaced by reflationary ones”. While that was caveated, the EUR soared as the debate over policy removal intensified. Will that be enough to generate a sustained EUR rally, we’re not so sure. But NZD/EUR has already bounced once off support.  Support 0.6380 Resistance 0.6450”

“NZD/JPY: The JPY seems to be at the whims of US Treasury yields right now. Yields rose overnight, so the USD/JPY followed. But moves were on par with NZD weakness, leaving NZD/JPY range-bound.  Support 81.20 Resistance 81.80 “

“NZD/GBP: The GBP has hitched a ride on the EUR’s coat-tails. NZD/GBP is testing support levels as a result. Support 0.5660 Resistance 0.5700”