- The NZD / USD has retreated towards multi-month lows.
- A sustained break below a two-month-old range has set the stage for further weakness.
The NZD / USD pair struggled to capitalize on the recovery move following the Reserve Bank of New Zealand (RBNZ) meeting, and found new offers near 0.6950. The pair fell back more than 60 pips from the highs and has now slipped below 0.6900 again.
Concerns that the continued rise in new COVID-19 cases could lead to a global economic slowdown, along with political tensions in Afghanistan, continued to weigh on investor sentiment. This, to a greater extent, helped offset a subdued action in the price of the US dollar and was seen as a key factor that put pressure on the kiwi.
From a technical perspective, the NZD / USD pair finally appears to have confirmed a bearish break below a two-month-old range. This comes after the occurrence of a death crossover, in which the 50-day SMA has fallen below the very important 200-day SMA, which supports prospects for an extension of the ongoing downward trajectory. .
The negative outlook is reinforced by the fact that the technical indicators on the day chart have drifted into bearish territory and are still far from being in the oversold zone. Some follow-up selling below the daily lows, around the 0.6870-65 region, will reaffirm the short-term bearish bias.
The NZD / USD pair could accelerate the decline towards intermediate support near 0.6850 before finally falling to 0.6800 en route to horizontal resistance at 0.6775-70.
On the other hand, any significant recovery attempt could continue to face some resistance near 0.6950. A sustained move further could trigger a short hedging move and push the NZD / USD towards the key psychological 0.7000 mark. This is closely followed by the 50-day SMA around the 0.7015 region, which should limit the upside.
NZD / USD day chart
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