On the daily chart below, we can see that the NZDUSD has recently broke below the March low as the RBNZ went on pause and the US economic data made the market to expect more hikes from the Fed . This has caused a divergence in monetary policy expectations and made the NZD one of the worst performers among the majors.
We can also notice that the fast selloff last week has made the NZDUSD a bit overstretched as depicted by the price distance from the blue 8 moving average. In such instances, we can often see some consolidations or pullbacks so that the price converges with the moving average in a new equilibrium.
NZDUSD Technical Analysis
On the 4 hour chart below, we can see that the price is now in fact consolidating just beneath the broken support that now may turn into resistance. If we get a deeper pullback, the sellers should be waiting near that 38.2% Fibonacci retracement level to target a break below the new low.
The buyers, on the other hand, do not have much to lean on here as there’s a big vacuum before the next support at 0.57. What the buyers can look for is misses in the US data this week, especially in the NFP report on Friday.
On the 1 hour chart below, we can see that NZDUSD is diverging with the MACD, which is generally a signal of weakening momentum often followed by pullbacks or reversals. If the price breaks above the last lower high at 0.6060, then we should see NZDUSD rallying back to the 0.61 handle. The sellers are likely to be waiting in that zone with a defined risk above the 38.2% Fibonacci level.
