NZD/USD appeared to be on track to test the June 2020 low (0.6185) as it traded to a fresh yearly low (0.6196) earlier this week, but recent price action raises the scope for a near-term correction in the exchange rate as the Relative Strength Index (RSI) reverses ahead of oversold territory.
NZD/USD carves a series of higher highs and lows as the decline from the monthly high (0.6576) failed to push the RSI below 30, and the exchange rate may continue to extend the advance following the Federal Reserve interest rate decision as the bearish momentum abates.
NZD/USD Rate Daily Chart
Source: Trading View
NZD/USD fails to test the June 2020 low (0.6185) for the second time as it recovers from the yearly low (0.6196), and the exchange rate may continue to retrace the decline from the monthly high (0.6576) as the Relative Strength Index (RSI) reverses ahead of oversold territory.
The recent series of higher highs and lows has pushed NZD/USD to a fresh weekly high (0.6395), but need a break/close above the Fibonacci overlap around 0.6370 (50% retracement) to 0.6430 (78.6% expansion) to bring the 0.6470 (50% retracement) to 0.6480 (78.6% expansion) region on the radar, which lines up with the 50-Day SMA (0.6487).
It remains to be seen if the 50-Day SMA (0.6487) will offer resistance as NZD/USD has helped below it since April, with the moving average indicating that the broader outlook remains tilted to the downside as it retains a negative slope.
--- Written by David Song, Currency Strategist
Follow me on Twitter at @DavidJSong
