The NZD/USD has been trying to rally from a double bottom formed in February and completed in mid-March. Although it showed respect of the double bottom as support, we can see in the daily chart that price has only been drifting slightly higher after the breakout.
Note in the daily chart that although price seems to have shifted away from the bearish trend, it has not entered a bullish one. It is simply in a slightly bullish consolidation. NZD/USD is still holding under the 200-day SMA. It also found resistance around 0.7740 in April, and has failed to push above this point twice. Furthermore, the RSI is stil holding mostly under 60 despite a brief violation at the end of April. Therefore, we can say that despite the multi-month consolidation, NZD/USD still has the prevailing bearish momentum in play.
The 4H chart shows the double bottom up close as price broke below 0.7533. So far this top has been respected as resistance. Note that price fell below the 200-, 100-, and 50-period SMAs and then treated them as resistance. This adds to the bearish bias.
Today, price is testing a rising speedline from the start of April. If price bounces up, there should still be a bearish bias if price can hold below 0.7630. Then, if price can fall below 0.7450, and the 4H RSI can tag 30, we are likely to have a bearish continuation first to the 0.74 handle, then the 0.7175-0.72 lows on the year.
Looking at the data points today, we saw that the weaker-than-expected ADP NFP employment change data pressured the USD across the board, but we also had poor NZ jobs data earlier. That is part of why we didn’t see the NZD/USD rally like EUR/USD for example.
NZ Employment Change q/q (Q1): 0.7%
Unemployment rate (Q1): 5.8%
Previous: 5.8% (revised from 5.7%)
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