We're finally seeing a bit of a correction developing in the torrid upside in the commodity currencies, though the development has been rather shallow relative to the usual warning indicators on these trades from intermarket action. The correction in equities, strength in the Japanese yen of late and strength in the bond markets suggest that the likes of NZD may have a bit of catching up to do on the downside.
Considering the relatively strong rejection of the overnight high at 0.7950 in NZDUSD, the market may look to test the downside and the mettle of the bulls. As long as the pair trades below 0.7945, the tactical outlook for NZDUSD is bearish, while the pair may be ready for a run down to an objective of 0.7775 initially and then on to 0.7660 for a second objective. Of course, the risk to such an outlook here is that the timing is off and it is a lost cause to fight such a steep uptrend until we've seen a larger scale sell-off develop.
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