NZD/USD Rate Rebound Faces Fed Rate Decision, New Zealand GDP Report

With that said, NZD/USD may continue to consolidate ahead of the key event risks on tap for later this week as it struggles to push back above the 50-Day SMA (0.7214), but the decline from the February high (0.7465) may turn out to be a correction in the broader trend rather than a change in NZD/USD behavior like the pullback from the January high (0.7315).

NZD/USD RATE DAILY CHART

Image of NZD/USD rate daily chart

Source: Trading View

  • Keep in mind, NZD/USD cleared the June 2018 high (0.7060) in December as it climbed to fresh yearly highs throughout the month, with the Relative Strength Index (RSI) pushing into overbought territory during the same period as the oscillator established an upward trend in the second half of 2020.
  • NZD/USD took out the 2020 high (0.7241) during the first week of January to come up against the Fibonacci overlap around 0.7330 (38.2% retracement) to 0.7350 (23.6% expansion), with the bullish price action pushing the RSI into overbought territory.
  • However, the move above 70 in the RSI was short-lived as the indicator failed to retain the upward trend from 2020, with the oscillator indicating a textbook sell signal during the first week of January as it quickly fell back from overbought territory.
  • A similar development occurred toward the end of February as NZD/USD pulled back from a fresh yearly high (0.7465), but the exchange rate has slipped below the 50-Day SMA (0.7214) for the first time since November to come up against the January low (0.7096).
  • It seems as though the Fibonacci overlap around 0.7070 (61.8% expansion) to 0.7110 (38.2% expansion) will continue to act as support as NZD/USD defends the 2021 low (0.7096), but lack of momentum to hold above the 50-Day SMA (0.7214) may continue to generate range-bound conditions.
  • Need a break/close above the 0.7260 (78.6% expansion) region to bring the overlap around 0.7320 (23.6% expansion) to 0.7350 (23.6% expansion) back on the radar, with the next area of interest coming in around 0.7450 (38.2% expansion) to 0.7500 (100% expansion).
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