NZD/USD: more to go in the blue-sky rally?

NZD/USD bulls are gunning for a test of the 0.74 double top highs.
NZD/USD RSI and momentum leaning bullish on 4hr and daily time frames.

Ross J Burland FXStreet

NZD/USD rallied from 0.7240 on the turnaround in the greenback with the DXY dropping to 89.038 from above the psychological 90 handle and is currently trading at 0.7368, up 1.28% on the day, having posted a daily high at 0.7374 and low at 0.7240.

AUD/USD: Australian dollar soared on dollar's slump

Despite higher US yields, with the 10-year note yield moving within a range of between 2.8059% - 2.9095% (the high scored by end of the day post-CPI data ) and after opening at 2.8312%, the DXY was down over -0.60% within a day's range of 89.057 - 90.124. The antipodeans took advantage of this and the Kiwi's blue-sky rally took the price up to challenge the descending trend line resistance at aforementioned highs.

Overnight events and price action: CPI's firmer headline was the catalyst - ANZ

Price action is telling

"The price action is telling and suggests other factors – trade concerns, emerging market growth, Chinese holiday, deficit concerns, oil prices etc are at play," explained analysts at ANZ who also argued that it looks like it will take something more material to knock the kiwi off its perch.

NZD/USD levels

NZD/USD has broken through the channel's ascending resistance level 0.7340/50 and is now up to test 0.7380 while RSI enters oversold territory with some potential to move deeper but meeting hourly resistance by the same metric.

4hr momentum is very strong, the strongest it has been for this year while the daily sticks offer more room to go on the upside till in both RSI and momentum. Bulls will have eyes for a test of the 0.74 handle and be challenging the late Jan start of Feb double-top highs. 0.7420 could prove to be a tougher area of resistance.

Author

Ross J Burland

FXStreet

Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.

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