NZD: Possible fall of the currency - Bearish signal on NZD/JPY and bullish reversal on EUR/NZD, GBP/NZD

NZD is doomed. It's seeming invincibility has perplexed a few market participants recently but they can start relaxing.

NZD appreciation has been driven by New Zealand's terms of trade, which have improved to the most favorable on record, according to Citibank metrics going back to 1996. But they're starting to deteriorate now and the currency is following suit.

The correction can run a long way: Speculative long NZD positions are at the highest level since 2013, according to CFTC data. And suddenly there are Bearish NZD technical signals being triggered in several major crosses: EUR/NZD and GBP/NZD both formed bullish key reversals on Tuesday, NZD/JPY is forming a bearish key reversal today. This is all being bolstered by RSIs retreating from very stretched levels.

NZD is one of the most "expensive" currencies in the world based on PPP measures and the country has a current-account deficit. A bearish narrative can take hold very quickly and set this currency back significantly within a couple of weeks.

Source: Bloomberg Pro Terminal

Trader - S. Fuchedzhiev

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• NZD/JPY – Opportunity for Short Positioning with Trend
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