NZD/USD[1] appears to be stuck in a defined range as it gives back the advance following the Federal Reserve interest rate decision[2], but failure to push above the 50-Day SMA (0.6429) may lead to a test of the June 2020 low (0.6185) as the indicator continues to reflect a negative slope.
In turn, the range bound price action may end up being temporary as NZD[3]/USD[4] struggles to extend the series of higher highs and lows from late last week, and the rebound from the yearly low (0.6196) may unravel as the exchange rate seems to be reversing course ahead of the moving average.
Source: Trading View[5]
NZD/USD trades in a narrow range after struggling to close above the Fibonacci overlap around 0.6370 (50% retracement) to 0.6430 (78.6% expansion), and it remains to be seen if the exchange rate will reverse course ahead of the like the price action seen at the start of the month.
The range bound price action looks poised to persist as NZD/USD manages to hold above the 0.6230 (61.8% retracement) to 0.6260 (38.2% expansion), but a break of the yearly low (0.6196) brings the June 2020 low (0.6185) back on the radar, with the next area of interest coming in around 0.6170 (50% expansion).
Will keep a close eye on the Relative Strength Index (RSI)[6] as it struggles to retrace the decline from earlier this month, with a move below 30 in the oscillator likely to be accompanied by a decline in NZD/USD like the behavior seen earlier this year.
--- Written by David Song, Currency Strategist
Follow me on Twitter at @DavidJSong
