NZD/USD potential decline to 0.7300 next months – Westpac

The kiwi spiked at 0.8357 posting a 5-months high after the European close in yesterday’s session, propelled by the news-risk rally sparked just before the opening bell in London. The NZD also found some extra fuel for the upside in the strong US manufacturing ISM print.

Many analysts have showed their concern about the stubbornness of the kiwi at these levels, but I.Speizer, expert at Westpac, sustain that the increased foreign appetite for New Zealand bonds since July is the main reason behind this (not so) surprising strength in the kiwi. These inflows have accelerated due to the relentless deterioration of the euro zone economic conditions and the last US debate regarding the debt ceiling.

Going further into his analysis, he warns about taking long positions in the cross at these levels, citing waning momentum in the commodity-currency indicated by Elliot waves and RSI readings. “A reversal is looming and should take the NZD to at least 0.7370 (low Nov.25) during the next few months”, he stressed.

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