The Kiwi (NZDUSD) decline to the current level of 0.6625 puts the currency at something of a crossroads. As anticipated earlier this month, the NZ currency indeed failed to maintain its mini upchannel, and although a short-lived attempt at resurrection was seen, the lack of appetite for such a rally proved insurmountable. The New Zealand dollar lost a full cent in value last Wednesday, and continues to lose ground. The charts suggest that momentum will start to slow down at these levels as profit-taking becomes the most sensible course of action open to holders of short positions. The truth is that Kiwi is now in a sort of wilderness where no clear direction is indicated. There are few reasons to buy, but as we drift lower the rationale in opening new shorts at these levels also dissipates. We’d expect to see some buying anywhere from here to 0.6550, and the lower it goes the heavier the buying should get. A break below 0.6550 would be bad news for the currency but the real test will be whether it can remain that low. We feel that would be unlikely in the current environment simply because the decline has been exacerbated by virtue of the fact that the market had been caught positioned the wrong way to start with. We’d advocate taking profits but beyond that it’s one to monitor and watch for further clues.