NZD/USD Price Analysis: Positive intraday move falters near 0.6200, bearish bias remains

• NZD/USD recovered modestly from the year’s low and snapped a two-day losing streak.
• A positive risk tone triggered dollar profit-taking and benefited the risk-sensitive kiwi.
• The technical set-up supports the prospects for an extension of a well-established downtrend.

The pair NZD/USD it gained some positive traction on Wednesday and moved away from the year’s low hit earlier this week. The rally helped spot prices break a two-day losing streak, though it lacked bullish conviction and stalled just before the round 0.6200 level.

The slight recovery in global risk sentiment triggered some profit taking around the safe haven US dollar and extended support to the risk sensitive kiwi. However, the prospect of more aggressive Fed rate hikes helped limit the dollar’s decline and capped NZD/USD gains.

Generally speaking, the recent decline seen over the past three weeks has occurred along a descending channel and points to a well-established short-term downtrend. Furthermore, the bearish oscillators on the daily chart are still far from oversold territory.

The technical setup suggests that any further move to the upside could be seen as a selling opportunity and risks fading quickly. Therefore, any further upside is likely to remain capped near descending channel resistance, currently at the 0.6225 area.

That barrier is followed by the 0.6260 supply zone, which now coincides with the 100-period SMA on the 4hr chart and should act as a key point. Sustained strength beyond that would indicate that the NZD/USD pair has formed a short-term bottom and trigger a short-covering move.

On the other hand, the 0.6135-0.6125 area (year low) seems to protect the immediate downside ahead of descending channel support just before 0.6100. A convincing break below would be seen as a new trigger for bearish traders and pave the way for further losses.

NZD/USD 4-hour chart

Technical key levels