NZD/USD is expected to trade with bearish bias. NZD/USD is undermined by the improved USD sentiment (the latest ICE spot dollar index 88.43 versus 88.20 on early Monday), higher U.S. Treasury yields (10-year at 2.114% versus 2.103% on late Friday), 1.3% on month increase in U.S. November industrial production (versus forecast +0.8%) and the U.S. November capacity utilization of 80.1% (versus forecast 79.4%) that outweigh a surprise drop in Empire State’s business conditions index to -3.58 in December from +10.16 in November (versus forecast for rise to 14) and an unexpected fall in the U.S. NAHB housing market index to 57 in December from 58 in November (versus forecast for rise to 59). The kiwi sales on soft NZD/JPY cross amid subdued investor risk appetite and weak commodity prices. However, NZD/USD losses are tempered by the NZD-USD interest differential.
The daily chart is mixed as stochastics is neutral, the MACD is in bearish mode.
The pair is trading below its pivot point. It is likely to trade in a lower range as far as it remains below the pivot point. Short positions are recommended with the first target at 0.7720. A break of this target will move the pair further downward to 0.7660. The pivot point stands at 0.7805. In case the price moves in the opposite direction and bounces back from the support level, it will move above its pivot point. It is likely to move further to the upside. In that scenario, a long position is recommended with the first target at 0.7835 and the second target at 0.7870.
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