NZDUSD Neutral with Bullish Potential

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NZDUSD shifted to the sidelines after Monday’s advance faltered near the 200-day simple moving average (SMA) and at a three-month high of 0.6924.

Despite yesterday’s festive mood in the FX space, the pair could barely extract any gains, remaining constrained within its weekly range and the 0.6800 territory. That said, the technical picture is still promising. The 20- and 50-day SMAs have registered a bullish cross for the first time since October, while the RSI and MACD oscillators maintain a clear uptrend within the bullish zone, all brightening prospects for the short-term trading.

Practically, for the positive signals to boost buying orders, the price will need to close above the 50% Fibonacci retracement of the 0.7217 – 0.6528 downleg at 0.6872, and then successfully claim the 200-day SMA at 0.6920. Such an action could add fuel to the bullish wave, driving the price straight up to the 61.8% Fibonacci of 0.6997. Further up, the price may test the 78.6% Fibonacci of 0.7068 before accelerating towards September’s and October’s highs at 0.7169 and 0.7217, respectively.

On the downside, the 38.2% Fibonacci of 0.6790 managed to add strong footing under the price this week. If it collapses, selling pressures could amplify towards the 0.6730 – 0.6690 zone that encapsulates the short-term SMAs and the 23.6% Fibonacci. Notably, the descending trendline drawn from January’s lows is also passing through this region. Hence, any violation at this point could produce a sharper decline likely to 0.6600, while deeper, the bears will attempt to activate the one-year-old downtrend below 0.6528.

In brief, the short-term bullish bias in NZDUSD has not faded yet despite the ongoing sideways trading. Traders may wisely wait for a rally above the 0.6872 – 0.6920 zone before they raise exposure in the market. Alternatively, a break below 0.6790 could boost engagement in selling activities.