The NZDUSD currency pair is currently on a downward trend, reaching new lows for the day and retesting the previous day’s low around 0.6263. This level is below the 38.2% retracement of September’s trading range at 0.62727. Despite briefly surpassing the 200-hour moving average at 0.6299 earlier in the day, the price was unable to sustain the momentum, leading to sellers regaining control and driving the price downwards.
In order to further solidify the bearish outlook, the next crucial step would be a break below 0.6263, followed by a breach of the swing level at 0.6253. The primary target for the sellers is the 50% midpoint of September’s trading range, approximately at 0.62407. This level is supported by the upward trending 100-bar moving average on the 4-hour chart. Subsequently, the focus would shift to the 200-bar moving average on the 4-hour chart at 0.62133, a level that has not been breached by the NZDUSD since August 16.
On the contrary, a move back above the 200-hour moving average of 0.6299 would be disheartening for sellers who have taken short positions. Looking ahead, upcoming fundamental factors will also play a significant role. The Reserve Bank of New Zealand is scheduled to convene next week on Wednesday morning (New Zealand time) or Tuesday night (U.S. time). Market expectations are leaning towards a 50 basis point rate cut, given the ongoing decline in inflation. In their previous meeting, the central bank reduced rates by 25 basis points, marking the first cut since March 2020.
The convergence of technical and fundamental elements suggests that the NZDUSD could be heading towards a critical juncture in the coming week. It is advisable to closely monitor the key levels mentioned to gauge the direction of the currency pair amidst evolving market conditions.
