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NZD/USD Technical Analysis: Key 6-Month Support Broken

NZD/USD Technical Analysis: Key 6-Month Support Broken

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Talking Points:

  • NZD/USD Technical Strategy: Flat
  • Kiwi Dollar at risk of deeper losses on 6-month support break
  • Near-term upswing may offer improved short entry opportunities

The New Zealand Dollar looks vulnerable to deeper losses against its US namesake after prices slipped below support capping losses since June. The pair faced heavy selling in the aftermath of last week’s FOMC rate decision, erasing all of December’s gains in just three days.

From here, a daily close below the 61.8% Fibonacci expansion at 0.6921 opens the door for a challenge of the 76.4% level at 0.6846. Alternatively, a move back above the 50% Fib at 0.6982 paves the way for a retest of the 38.2% expansion at 0.7042.

The available trading range is too narrow to justify taking a trade from a risk/reward perspective. Furthermore, the fundamental landscape may allow for a corrective US Dollar pullback, which might offer better entry opportunities than currently available. In the meantime, staying flat seems most prudent.

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