The NZD/USD has picked up the bearish tone once again overnight and into the London session as two primary forces continue to pressure the pair lower. The first of these is the continuing political uncertainty surrounding the currency with the recent election failing to deliver any clear mandate for either of the major parties with the National Party taking 56 seats, the Labour party holding 46 seats, and with the First party and the Greens then effectively holding the balance of power with 17 seats between them. Add to this recent comments from the RBNZ, who like the RBA in Australia have suggested a weaker currency would be helpful, this too has helped to drive weakness into the currency across the complex. The US dollar of course has added further momentum with a pick up in hawkish commentary helping to lift the currency of first reserve from its recent bearish trend.
From a technical perspective, the trigger of heavy selling occurred on the 20th September on high volume and a deep wicked candle which touched an intraday high of 0.7434, before closing well off this level and confirming weakness ahead with the pair moving firmly through the volume point of control at 0.7255 and adding further downwards pressure. Overnight the pair open gapped down, and with little in the way of meaningful support, either price based or volume based below, we could see the pair continue down to test a stronger level now in place in the 0.6850 area longer term.
By Anna Coulling
Charts from NinjaTrader