NZD/USD: starting out on a solid footing, time to fade?

Currently, NZD/USD is trading at 0.7512 having posted an early Asian high at 0.7516 and low at 0.7500.

Despite New Zealand Building Permits (MoM) arrived down to -1% in June from previous 7%, NZD/USD is starting out on a firm footing, albeit struggles to funny recover from the 0.7560 sell-off on 26th July. 

Friday's US data offered the bulls a platform for a reversal, although analysts at ANZ have explained that they continue to favour fading NZD strength at these levels, "given stretched positioning, the approaching election, and an ultimate turn in the global liquidity cycle," they explained, adding, "even one of the more dovish members of the FOMC is talking about balance sheet normalisation. But the picture is clouded by patchy US data and political unease, and the technical picture looks ‘strong’. Picking the timing of a NZD/USD move lower is proving difficult."

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Westpac's NZD/USD 1-3 month: 

"Stretched technical and stretched long positioning argue for a decent downward correction, but until the broad US dollar starts to recover from its seven-month old decline, the NZD can remain elevated," explained the analysts at Westpac, adding, "eventually if the Fed’s normalisation cycle pushes US interest rates and the US dollar higher, NZD/USD could fall to 0.6800 by year end (28 July)."

NZD/USD levels

On the bid, the next resistance is at 0.7560 as the post FOMC high. To the downside, however, below the 0.7500 psychological level, 0.7460 was Friday's 10-month high and 0.7485 was the September high where bulls are collecting the bid currently with slippage to 0.7480 the o/n low. Further out, the next supports are 0.7459, 0.7400, 0.7386, 0.7280, (11th July high), 0.7205/06 June 22/21 lows; 0.7186 June 15 low; 0.7150 June 5 high; 0.7127 June 6 low. On the wide, on a break below 0.7080/00 opens 0.6970.