Fourth time’s the charm for NZD/USD? After four failed attempts at breaking below the .8550 minor psychological support, the pair finally broke below the floor and set its sights on the next area of interest around .8400.
The pair still has a few pips to go before reaching the .8400 resistance-turned-support zone but, with stochastic deep in the oversold zone, I’m thinking that a pullback might take place before NZD/USD heads any lower. In fact, I’ve got my eyes locked on the retracement levels that Big Pippin pointed out in today’s Daily Forex Chart Art!
Word through the grapevine is that Fonterra, New Zealand’s largest dairy exporter, is reducing its payout to dairy producers by roughly 20% and is estimating lower milk prices for the coming months. This basically translates to lower revenues for farmers, which might then lead to a slowdown in the country’s major growth driver. With that, traders are pricing in downgrades in the RBNZ’s GDP and inflation forecasts, which might then lead central bank officials to adopt a more cautious monetary policy bias.
I haven’t set any entry orders yet though, as I am waiting for signs of a retracement on shorter-term time frames. Do you think the .8550 mark is a good area to short NZD/USD? I’d love to get your feedback on this!
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