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"Emerging-market and commodity currencies do seem unhealthily reliant on Fed procrastination. The very factors that caused the Fed to hold off on a rate hike in September are those which should worry emerging-market and commodity currencies the most ."
- Westpac Banking Corp. (based on Bloomberg)
Pair's Outlook
The Kiwi-Dollar currency pair seems to have stabilised near 0.6771 (up-trend and weekly PP), meaning it is ready to resume the rally. The near-term bullish bias is also reinforced by the daily technical indicators (5 out of 8 are giving ‘buy' signals). However, long-term recovery is doubtful, as the exchange rate is approaching the 200-day SMA. Additionally, monthly studies are mostly pointing south. Consequently, the accelerated up-trend is expected to be broken after a test of 0.7050.
Traders' Sentiment
The distribution between the bulls and bears in the market is completely unchanged: the shorts take up 70% of the market. At the same time, the gap between the buy and sell orders stays negligible.
© Dukascopy Bank SA