The NZD/USD attained new short and near-term lows early this morning, but technical traders who are wagering on downside should remain attentive to shifting sentiment.

The NZD/USD continues to flirt with lows and saw the 0.60400 come within sight earlier this morning. Inflation data from New Zealand continues to also produce lower than anticipated outcomes, showing the Reserve Bank of New Zealand may remain rather dovish moving forward.

However, while many traders focus on New Zealand economic data, let’s remember the USD is a powerful force and the movement lower in the NZD/USD is largely being caused by U.S centric notions regarding what the U.S Federal Reserve is going to do in three weeks.

Lows this morning in the NZD/USD were the low for the past week, in fact a look at a one month chart clearly shows technical depths are at their worst. Day traders will need to upload three month technical chart information to properly gauge the latest depts and compare them to outcomes seen in the middle of August.
 

NZD/USD and Potential Bullish Sentiment

The NZD/USD is certainly testing lows, this morning’s foray to new depths is a warning sign that fragile sentiment is controlling financial institutions. Traders who want to gamble on the notion the NZD/USD has now reached oversold territory cannot be blamed, but the timing of a sustained reversal higher remains problematic and possibly quite an expensive wager if proven wrong.

The U.S will release important Retail Sales and weekly Unemployment Claims tomorrow. Also tomorrow the ECB will release their interest rate decision and the reason this is important is because the ECB is expected to cut their Main Refinancing Rate by 0.25.

If they do this it might set the tone for financial institutions to also start considering a more dovish Federal Reserve again. The NZD/USD will get plenty of impetus tomorrow, but it will come late in the day for folks in New Zealand, so Friday’s early trading will get volatile in the currency pair as financial institutions in the Pacific get involved.
 

Speculative Risk Management in the Near-Term

The lows of the NZD/USD exchange pair currently are still above depths seen in July of this year. Financial institutions have certainly grown cautious, but the selling in the currency pair has not reached violent levels. If the 0.60400 to 0.60500 continue to provide support over the next day, then tomorrow’s data outcomes from the U.S could set the table for slight reversals higher.

Cautious attitudes are part of the landscape for the moment.

• All traders know the U.S election is now less than three weeks away.
• Financial institutions may create volatility in the near-term, but it could be sideways choppy trading that is mostly seen.
• Risk management will be crucial for day traders tomorrow and on Friday.

NZD/USD Short Term Outlook:

• Current Resistance: 0.60710
• Current Support: 0.60610
• High Target: 0.61260
• Low Target: 0.60425

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