Bottom line: NZDUSD long term structure continues to remain bullish against 0.5470 lows in March 2020. The currency might have carved an intermediary top around 0.6790 levels recently. Bears might remain poised to be in control from here targeting towards 0.6000 handle.
Fundamental Outlook:
NZDUSD has managed to pull back after hitting 0.6609 lows yesterday. The exchange rate had come under pressure as global markets reversed sharply over the last few trading sessions. Further the RBNZ would be prepared for another stimulus and negative interest rate policy, to help support the economy. NZDUSD might remain under pressure as US Dollar gains momentum over next few weeks.
USDJPY has been locked within a range between 105.50 and 107.00 in the past few trading sessions. The anti-risk Japanese Yen has managed to gain against GBP, EUR, AUD and NZD as risk aversion returned. The exchange rate might take cues from further development on a possible early elections.
SPX500 had revered sharply after hitting all-time highs at 3588 on September 02, 2020. The indice had collapsed nearly -9.0% before finding support around 3300 handle. This might be the beginning of another round of selloff, as investor sentiment remains fragile over rising US-China tensions.
Technical Analysis:
NZDUSD might have carved a meaningful top around 0.6790 mark early this month. Also note that a past resistance at 0.6750/60 has also been taken. Bulls have registered themselves and are stay to stay for long, but after a pullback towards 0.6000 levels in the near term.
NZDUSD bears might be poised to break below immediate support around 0.6490 mark from here. This would confirm a major top is in place at 0.6790 and that bears are in control for now. Intraday resistance should be seen around 0.6720/50 levels.
NZDUSD had dropped to 0.5470 in March 2020. Since then, the currency has produced a religious uptrend through 0.6790 levels. Also mark that the entire rally between 0.5470 and 0.6790 is an impulse wave, which should be followed by a corrective drop, ideally.
The fibonacci 0.618 retracement of above rally is seen just below 0.6000 handle. Probability remains high for a bullish bounce, if prices manage to drop through that zone. Most traders might be preparing to initiate fresh longs around 0.6000 support.
Prepared by
Harsh Japee, Technical Analyst.
NZDUSD Chart
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