NZD/USD hits 4-1/2 month low of NZ government announcement

The offered tone around the New Zealand dollar strengthened, pushing the NZD/USD to 4-1/2 month low of 0.7048 after NZ First said it will back the labor party to form a new government.

Jacinda Ardern to be the next NZ PM

Leader of the Labour Party, Jacinda Ardern will become the next New Zealand Prime Minister. Mr. Peteres may become the Deputy Prime Minister.

The opinion polls in the run up to the vote had indicated that Kiwi bulls favor the incumbent government. Investors also fear that the new government may take measures to correct the NZD overvaluation. Mr. Peters has often questioned the need to persist with an inflated dollar.

No wonder, the Labour-NZ First coalition announcement has not gone down well with the markets.

NZD/USD Technical Levels

At the time of writing, the currency pair is trading at 0.7040. The immediate support is lined up at 0.7032 (weekly 100-MA) ahead of 0.70 (psychological support), which, if breached shall open doors for test in July 2016 low of 0.6951.

On the higher side, a move above 0.7050 (previous week's low) could yield 0.71 (zero levels) and 0.7114 (10-day MA).