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The worst performing currency today was the New Zealand dollars but all 3 of the commodity currencies traded lower versus the greenback which should not be a surprise to our readers as we’ve been looking for corrections this week. The New Zealand dollar was hit the hardest as traders took profits on long positions ahead of the RBNZ’s rate decision. The RBNZ is widely expected to leave rates unchanged but the recent trend of softer data suggests that the central bank could be less hawkish. Last night’s lower 2 year inflation expectation index gave NZD/USD traders even more reason to cut their longs.
Technically, NZD/USD ended the day below 20-day SMA for the first time in nearly 4 weeks and is poised for a deeper correction down to the 50-day SMA near 73 cents. On a weekly basis, the pair also rejected the 50-month SMA. However there is an important Fib support right under 0.7350. This level stretches from the 2009 to 2011 rally so it could serve as a stopping point for NZD/USD but chances are, it will break and the pair will sink below 73 cents.