NZD/USD - Off 19-day low, is a corrective rally on the cards?

Off 19-day low, but holds below the 50-day MA.
Corrective rally likely due to bullish price RSI divergence on 1-hour chart.

Omkar Godbole FXStreet Contributor

The NZD/USD has recovered from the 19-day low of 0.7220 and could move above the 50-day moving average (MA) of 0.7245, given the relative strength index (RSI) on the 1-hour chart has begun to diverge in favor of the NZD bulls.

As of writing, the pair is trading at 0.7230. China NBS manufacturing PMI released earlier today showed the activity slowed more than expected to the weakest in over 1-1/2 years. Further, the service sector slowed to the lowest since October last year in February.

But the slowdown in the activity has been associated with disruptions caused by the Lunar New Year holidays, meaning the situation will likely normalize in the months ahead. Hence, the NZD has seen little or no action post-China data release.

Ahead in the day, the spot may see renewed selling pressure if the European equities respond negatively to Powell's positive comments on the US economy.

NZD/USD Technical Levels

A break above 0.7245 (50-day MA) would open up upside towards 0.7279 (5-day MA)and 0.73 (psychological level). On the other hand, a violation at 0.7220 (session low) would expose 0.7198 (Feb. 9 low) and 0.7176 (Feb. 8 low).

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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