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NZD/USD dips below 200-hour EMA, Asian markets sell risk

10/23/2018, 10:59:52 AMMarket Analysis
NZD/USD dips below 200-hour EMA, Asian markets sell risk

The NZD/USD pair is feeling the pull of gravity in Asia, courtesy of the risk aversion in the equities and weakness in the Chinese yuan.

At press time, the pair is trading at the session low of 0.6543 - down 0.32 percent on the day - having registered a 0.86 percent drop yesterday.

The losses the NZD and other risk currencies are likely associated with the dark mood in the equities. For instance, the S&P 500 futures are down 0.42 percent at press time. Further, Japan's Topix is down 1 percent and Australia's S&P /ASX 200 has shed 0.6 percent.

Meanwhile, the losses in Chinese yuan could be adding to the bearish pressure around the NZD/USD pair. Moreover, the risk-on rally in the Chinese stocks has not translated into CNY (or CNH) strength, leaving the USD/CNH (offshore yuan exchange rate) on the path toward the major psychological hurdle of 7.00.

Should the CNY witness a sudden reversal in fortunes, then the NZD and other risk currencies will likely pick up a strong bid.

NZD/USD Technical Levels

Resistance: 0.6562 (50% Fib R of 0.67/0.6424), 0.6594 (61.8% Fib R of 0.67/0.6424), 0.6599 (50-day EMA)

Support: 0.6538 (38.2% Fib R of 0.6424/0.6611), 0.6523 (Oct. 19 low), 0.65 (psychological level)