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NZD/USD Rate Recovery Emerges Ahead of 50-Day SMA

NZD/USD Rate Recovery Emerges Ahead of 50-Day SMA

David Song, Strategist

NZD/USD appeared to be threatening the ascending channel from earlier this year as it slipped toward the 50-Day SMA (0.6799), but the exchange rate may continue to hold above the moving average as it snaps the series of lower highs and lows from the yearly high (0.7034).

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NZD/USD bounces back from a fresh monthly low (0.6806) as theUS Consumer Price Index (CPI)generates a bearish reaction in the US Dollar, and the exchange rate may stage a larger recovery over the coming days as it seems to be carving a bullish outside day candle formation.

NZD/USD Rate Daily Chart

Image on NZD/USD rate daily chart

Source: Trading View

The broader outlook for NZD/USD remains constructive as it cleared the opening range for 2022 in March, with the 50-Day SMA (0.6799) developing a positive slope as the exchange rate established an upward trending channel.

Nevertheless, lack of momentum to close above the Fibonacci overlap around 0.6940 (50% expansion) to 0.6990 (23.6% retracement) pushed NZD/USD below channel support, but the exchange rate appears to be reversing course ahead of the 50-Day SMA (0.6799) as it snaps the series of lower highs and lows from the yearly high (0.7034).

Failure to break below the 0.6770 (23.6% expansion) to 0.6810 (38.2% expansion) area may push NZD/USD back above the 0.6870 (50% retracement) region, with a move above the 200-Day SMA (0.6902) bringing the overlap around 0.6940 (50% expansion) to 0.6990 (23.6% retracement) back on the radar.

However, a break/close below the 0.6770 (23.6% expansion) to 0.6810 (38.2% expansion) area opens up the March low (0.6729), with the next area of interest coming in around 0.6690 (38.2% expansion) to 0.6710 (61.8% expansion).

--- Written by David Song, Currency Strategist

Follow me on Twitter at @DavidJSong

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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