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NZD/USD continuing to sag, 0.70 on the cards if bulls don't step in

4/26/2018, 10:33:04 AMTrading Strategies
NZD/USD continuing to sag, 0.70 on the cards if bulls don't step in

The Kiwi is trading near the bottom against the US Dollar, testing around the 0.7075 region heading into the Tokyo session.

The NZD/USD fell for the seventh consecutive trading day on Wednesday, sending the pair into fresh four-month lows. US Treasuries are considered the main culprit for the Greenback's recent strength, with the 10-year note yield crossing the 3% threshold yesterday. Traders concerned about the rising cost of US debt have been moving into the USD en masse, but equities are currently being kept afloat by earnings season, with many of the S&Ps largest companies reporting healthy profits.

Thursday brings March's Trade Balance figures for the Kiwi at 22:45 GMT, which is expected to print at $200 million, a slight decline from the previous figure's $217 million trade surplus. However, Friday will be the day to focus on for all of the USD pairs, with preliminary US GDP figures dropping on markets, and traders will be intensely focused on the figures, as FXStreet's own Flavio Tosti explained, "... as investors will closely pay attention to the Personal Consumption Expenditures Index (PCE) which is the favorite inflation indicator of the Federal Reserve Bank. A strong deviation to the upside can give an additional boost to the US dollar as investors will be confident that more rate hikes will be coming. On the same day, the US Gross Domestic Product (GDP) will also be the focus of attention for market participants. The GDP is expected to increase 0.4% quarterly and advancing 1.4% on an annual basis. A strong reading will reinforce the view that the US economy is expanding and that hiking interest rates is indeed justified."

NZD/USD Levels to watch

The pair has tumbled deeply into bearish territory over the last two weeks, and support is looking thin until swing highs from last November mark out potential turnaround points from 0.6980  down to 0.6880, while a bearish correction from here will be faced with March's swing low near 0.7150, with the 50.0 Fibo level around 0.7225.