Bottom line: NZDUSD structure remains constructive for bulls until prices stay above 0.5470 levels. At the moment, we can witness sideways movement and a bullish break is expected to push towards 0.6760 in the medium term.
Fundamental Outlook:
US Dollar gained as EURUSD sold off just ahead of the EU Summit yesterday. There is pessimism over EU leaders coming to an agreement on a $2.2 trillion plan, which helped the US Dollar gain against major currencies, despite a rally in SPX500 and Dow Jones.
The SPX500 alongside Dow Jones managed to close higher by over 2% yesterday. Optimism over another $484 billion stimulus talks by Fed and Netflix earnings, showed up on the indices as they opened gap up. As we stare at a Global Recession that could be worst since the Great Depression of 1930s, it is not difficult to gauge another round of selloff inching closer though.
Oil prices closed in the green yesterday with Brent over 5% and WTI close to 10%. It is too early to confirm but Oil prices could be well past their multi-year lows respectively. Oil trades above 7% while we write this article and may continue higher as the day progresses.
Technical Analysis:
NZDUSD bulls continue to remain in control since 0.5470 lows since March 19, 2020. It is trading around 0.5975 levels for now and looking poised to extend towards 0.6450 in the near term.
Immediate support is seen at 0.5843, while resistance should come in around 0.6450 levels respectively. Please note that NZDUSD has found support around fibonacci 0.618 retracement of the recent rally between 0.5843 and 0.6130 levels respectively.
A bullish reversal seems to be underway with a potential Morning Star candlestick pattern appearing on the daily chart. If prices are able to hold above 0.5843 levels, NZDUSD bulls shall remain in control pushing higher towards 0.6400 at least.
Most traders might be willing to add more long positions around 0.5950/60 with a protective stop below 0.5800 and projected targets around 0.6400/50 and 0.6700/50 respectively.
Prepared by
Harsh Japee, Technical Analyst.
NZDUSD Chart
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