NZD/USD’s decline resumes today and hit as low as 0.6420 so far. The weakness in Kiwi is mainly due to external factors, rather than domestic ones. The economy remains strong while RBNZ is expected to continue with its tightening cycle. But the pace of rate hike would likely be outpaced by Fed’s. Additionally, concerns over China’s slowdown on lockdowns, and general risk-off sentiment are weighing on New Zealand Dollar too.
Immediate focus is now on medium term channel support (now at 0.6430). Sustained break there could prompt further downside acceleration to 61.8% projection of 0.5467 (2020 low) to 0.7463 (2021 high) at 0.6229. Nevertheless, break of 0.6543 minor resistance would be an initial sign of stabilization, and turn bias to the upside for rebound first.
