The New Zealand dollar may extend its decline to the lowest level in three months after dropping below its 200-day moving average last week, Commerzbank AG said, citing trading patterns.
The so-called kiwi is poised to drop to 74.58 U.S. cents, the weakest since June after breaching the moving average at 80.01 cents, technical analysts Karen Jones and Axel Rudolph in London, wrote in a note to clients today. The currency may find initial support at previous lows of 79.69 and 79.28, they said.
“We would allow for some profit taking here, however given that technical indicators are negative, rebounds should remain tepid,” Jones and Rudolph wrote. “Once last week’s low at 79.69 cents is fallen through, the July low at 78.08 will be back in play. Failure here will mean that a medium-term top has been formed and that a drop back towards the 74.58 June low is underway,” they said.
The New Zealand dollar weakened 0.7 percent to 79.76 U.S. cents at 12:09 p.m. London time. The last time the currency traded at 74.58 cents was on June 1.
The kiwi has depreciated 3.3 percent in the past month, the second worst performer after the Australian dollar among 10 developed-nation currencies tracked by Bloomberg Correlation- Weighted Indices.
In technical analysis, investors and analysts study charts of trading patterns and prices to forecast changes in a security, commodity, currency or index.
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