KRW: USD/KRW Off Highs But Underperforms USD Index Falls, Kospi Surge Continued

• RES 3: 147.74 - High Jan 15 and bull trigger (cont)
• RES 2: 146.53 - High Aug 6 
• RES 1: 142.95 - High Apr 7
• PRICE: 139.35 @ 16:24 GMT May 12
• SUP 1: 139.28 - 1.0% 10-dma envelope
• SUP 2: 136.57 - 1.382 proj of the Jan 28 - Feb 20 - Feb 26 bear leg   
• SUP 3: 134.89 - 2.000 proj of the Jan 28 - Feb 20 - Feb 26 bear leg

JGBs are holding the bulk of the recent strong bullish reversal from early April, rejecting any test of fresh cycle lows for the M5 contract. This defies the bearish momentum studies drawn on the longer-term chart, clearing moving-average resistance to print 142.40 at the new upper level. To the downside, sights are on 136.57, a Fibonacci projection. 144.48 is the medium-term target on any recovery.

The NZD had a range Overnight of 0.5847 - 0.5941, Asia is opening around 0.5855. US Stocks and risk have roared higher on a US/China agreement to a significant reduction in tariffs for 90 days.

• This has seen the USD gap higher from oversold levels, the NZD/USD has as a consequence moved lower but continues to perform well in the crosses. NZD/JPY up over 1% on the day.
• “China-proxy currencies Aussie and Kiwi should continue to outperform safe haven currencies yen and Swiss franc as the US and China have taken significant steps to de-escalate their trade war,” according to Brown Brothers Harriman.(BBG)
• The NZD tried to bounce as risk outperformed but the surge in the USD saw it fall away and then the support just below 0.5900 finally break.
• Price is now coming back to test the bigger support back towards 0.5800, this needs to hold for those who believe the USD is set to move lower.
• CFTC Data showed little movement, with Asset managers adding very slightly to their shorts and the leveraged community slightly reducing their own short.

Fig 1: NZD/USD Spot Daily Chart

Source: MNI - Market News/Bloomberg

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