NZD/USD saw a very sharp fall on Monday, which was partially reversed as risk-assets recovered later in the day. Whilst above key support at 0.7006/00, further high-level ranging remains the base case. However, a break below here would open up 0.6855, the Credit Suisse analyst team reports.  

Key quotes

“NZD/USD saw a sharper rejection from the next major resistance at the 50% retracement of the entire 2014/2020 fall at 0.7151/71 yesterday, which reinforced the case for a potentially more significant consolidation phase prior to an eventual resumption of the core bull trend. The market saw the anticipated move towards the key price lows at 0.7006/00 on Monday, however, the rebound from this level has set up the potential for an intraday top and now needs to hold on a closing basis to avoid a much more protracted and damaging corrective phase, with a RSI top already in place.” 

“Assuming we hold above 0.7006/00, an eventual clear and closing break above 0.7151/71 would trigger a resumption of the core bull trend, with resistance then seen at 0.7200.” 

“A break below 0.7006/00 would complete the aforementioned top, with next supports at 0.6918/10, then the 55-day average at 0.6862/55, which we expect to hold if reached.”