New Zealand Dollar Forecast: NZD/USD Eyes 200-Day SMA for First Time in 2022
The recent rally in NZD/USD appears to have stalled ahead of the 200-Day SMA (0.6929) as it pulls back from a fresh yearly high (0.6926), but the exchange rate may stage further attempts to push above the moving average as it clears the opening range for 2022.
As a result, NZD/USD may continue to track the upward trending channel from earlier this year as it takes out the January high (0.6891), and the exchange rate may continue to retrace the decline from the October (0.7219) as long as it manages to hold above the March low (0.6741).
NZD/USD Rate Daily Chart
Source: Trading View
It remains if the monthly opening range will have a similar dynamic like the behavior seen last month as NZD/USD registered the monthly low (0.6566) on February 1, with a move above the 200-Day SMA (0.6929) along with a break/close above the 0.6940 (50% expansion) to 0.6990 (23.6% retracement) region opening up the Fibonacci overlap around 0.7070 (61.8% expansion) to 0.7110 (38.2% expansion).
Will keep a close eye on the Relative Strength Index (RSI) as the recent rally in NZD/USD pushes the oscillator towards overbought territory for the first time in 2022, with a move above 70 in the indicator likely to be accompanied by a further appreciation in the exchange rate as the bullish momentum gathers pace.
However, lack of momentum to close above the 0.6870 (50% retracement) area may push NZD/USD back below the overlap around 0.6770 (23.6% expansion) to 0.6810 (38.2% expansion), with the next region of interest coming in around the 0.6690 (38.2% expansion) to 0.6710 (61.8% expansion).
--- Written by David Song, Currency Strategist
Follow me on Twitter at @DavidJSong
