The New Zealand dollar is the top performer today, can it last?
NZD/USD gains a half-cent
New Zealand consumer confidence fell 2.8% in a report earlier today but you wouldn't know it from the currency scorecard. The kiwi is up 56 pips today to 0.7139 in its largest one-day gain in three weeks.
The kiwi has been getting beaten up over the last month on election and political worries. Negotiations are continuing and there is no near-term expectations of a resolution.
That's the first reason why today's bounce is so suspect. The second is the chart.
This looks like a textbook head-and-shoulders pattern that broke down on the initial fall below 0.7130.
We're in the 'seller's remorse' phase here now and are getting a retest of the Aug 31 low and the 200-day moving average. If those levels hold in the day ahead, watch out for a renewed round of selling and slow fall down to the May lows.