Forex Analysis Bottom line: NZDUSD long term structure continues to remain bullish against 0.5470 lows in March 2020. In the short term though, the currency has managed to carve a meaningful top around 0.6800 mark and bears might be inclined to push lower towards 0.5950 levels going forward.
Fundamental Outlook: Forex Analysis
NZDUSD has managed to regain some lost ground and trades around 0.6630/40 levels as we prepare to publish today’s update. The exchange rate had dropped through 0.6500 mark over the last week alongside risk assets and global equity markets. Risk aversion might return soon as investor psychology remains fragile.
Technical Analysis: Forex Analysis
NZDUSD is producing a potential counter trend rally, which might terminate ahead of 0.6700/20 resistance zone. Bears might remain inclined to resume lower from there and push towards 0.5950 levels in the next few weeks. Ideally 0.6800 resistance should hold well.
NZDUSD had dropped through 0.5470 lows in March 2020. Since then, bulls have remained in control and managed to produce a religious uptrend through 0.6800 mark recently. Also note that bulls have cleared past resistance around 0.6790, which calls for a corrective drop.
Further, the above rally between 0.5470 and 0.6800 seems to have unfolded as an impulse wave. Ideally, an impulse rally is followed by a corrective drop before resuming higher again. NZDUSD bears might be poised to carve a corrective drop toward 0.5950 mark going forward.
Also note that fibonacci 0.618 retracement of the above rally is seen passing through 0.5950 levels as well. Hence, probabilities remain high for a bullish bounce if prices drop to those levels going further. Bears would remain in control until prices stay below 0.6800 mark.
Most traders might remain inclined to initiate fresh short positions around 0.6700/20 resistance zone, with protective stops above 0.6800 mark and projected targets below 0.6000 mark going further. Only a push through 0.6800 would change the above bearish structure.