Lower and Lower and... Lower? - NZDUSD

2022년 9월 20일

The Kiwi has just pierced the 0.59 mark dropping to its lowest level since April 2020. But does it stop there?

Heavy selling pressure remains with the NZD starting the NA session as the weakest currency and a few factors likely keep weighing it down. Firstly, continued recession fears will likely continue to benefit the safe-haven greenback leaving the more risk-sensitive Kiwi out to dry. Wednesday's Fed rate decision will of course be a major influence on the currency pair but foreseeing continued aggressive tightening with a likely 75 bps rate hike (at least) could pull this pair even further. Apart from this, overall market sentiment continues to remain fragile amid concerns that rapidly rising interest rates will lead to a deeper global economic downturn. The war in Ukraine and China's zero-COVID policy continue to fuel recession fears.

Technically speaking, giving way to previous 2020 lows puts the next focus on a May 2022 trendline as a next possible point of inflection. We also see a 4h downward channel which has formed possibly holding currency in a tight downtrend. I would be looking for a retracement to the 0.5925 area before snagging entry for a potential 175 pip move. If that retracement does not come, I would like to see a break and hold of the channel as well as the multi-month trendline before selling. Either way, continued weakness seems inevitable for the Kiwi.

Bearish bias.