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The NZDUSD has been plummeting for 7-weeks straight as Dollar strength continued to stir market sentiment in the near term. The pair has found near-term support above 0.6200, a 1-year low. The fears of an aggressive Fed rate hike continued to boost Dollar strength in the near term. Fed Daly rallied behind a 50bps hike in the next two policy meetings giving support to the dollar. However, Fed chair Powell made remarks of a 75bps not actively considered soiled the hawkish sentiment as the market braced for further tightening.
The Chinese lockdowns remain a key factor affecting the global markets as slowing growth fears peaked. The easing of lockdowns by China may relax the risk sentiment in the near term and bring market optimism.
Investors focus on US Trade Price index data, Michigan consumer sentiment and FOMC members’ speeches later in the New York session.
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The NZDUSD pair is currently bearish as bears target the 0.6200 psychological support. The pair suffered renewed selling pressure after breaching the 0.63866 support giving way for further downside movement. The Williams Alligator shows the pair remains capped by a bearish outlook as long as the price trades below the 66.00 psychological barrier.
The 0.6200 psychological barrier is a critical area to watch out for as a defence against further drop as the Bulls seeks a bottom to recover losses in the near term. However, a break below the 0.6200 support may cause further selling pressure towards the 0.58500, a 2021 support.
The RSI is currently trading at 24.00 indicating the pair is approaching extreme bearish conditions. The RSI shows the pair is getting closer to experiencing a correction if 0.6200 support holds.
ActivTrader Sentiment indicator shows that 59% of retail traders are now long on the NZDUSD indicating a change in the sentiment of the pair. However, the NZDUSD could continue to drop as buyers seek to pick a near-term bottom.
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The NZDUSD traded higher by +0.13 % during early Friday morning. The pair found near-term support at 0.6220 and a hold above the 0.6200 big figure support may see bulls targeting the 0.65440 area, previous support turned resistance, coinciding with the Bollinger Band (20) baseline (dynamic pivot) at 0.6496.
The Stochastic Oscillator indicates the pair is extremely oversold on the Daily chart and a retracement may be due in the near term. The oscillator reading is trading below 4.00 which is an extreme oversold condition.
However, a break below the 0.6200 may see bears seeking the 0.6175 area before a remarkable move to the upside.
