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NZD/USD Price Analysis: Sets for a further breakdown below 0.6170

  • A recovery attempted by NZD/USD looks less confident as investors are losing hope in China’s economic recovery.
  • Investors should be prepared for sheer volatility ahead of the release of the US inflation data.
  • A successful breakdown of the Rising Channel pattern has pushed the Kiwi asset into a bearish trajectory.

The NZD/USD pair has attempted a recovery move after printing a fresh two-week low near 0.6170. The recovery move by the New Zealand Dollar looks less confident as investors are losing hopes of economic recovery in China despite dismantling lockdown curbs by the administration.

The Chinese economy is in a disinflationary process despite the announcement of various stimulus to spurt the overall demand. On Tuesday, agencies reported a monthly deflation of 0.3% in the Chinese economy while the street was expecting an acceleration in prices of goods and services by 0.1%. Annual inflation slowed to 0.7% from the former release of 1.0%.

It is worth noting that New Zealand is one of the leading trading partners of China and weak demand in China would also impact the New Zealand Dollar.

Investors should be prepared for sheer volatility ahead of the release of the United States inflation data. Meanwhile, S&P500 futures have added some gains in early Asia after a rangebound Tuesday, indicating an improvement in market sentiment. The US Dollar Index (DXY) is likely to test the immediate cushion of 102.00.

A successful breakdown of the Rising Channel chart pattern on a four-hour scale has pushed the Kiwi asset into a bearish trajectory. The 20-period Exponential Moving Average (EMA) at 0.6229 is acting as a barricade for the New Zealand Dollar bulls. Potential horizontal support is plotted from March 08 low at 0.6084.

The Relative Strength Index (RSI) (14) has shifted into the bearish range of 20.00-40.00, which indicates that the downside momentum has been triggered.

More weakness will be witnessed if the Kiwi asset surrenders April 11 low near 0.6170, which will drag the major to March 15 low at 0.6139 followed by March 08 low at 0.6084.

Alternatively, a decisive upside move above February 07 high at 0.6363 will expose the Kiwi asset to the round-level resistance at 0.6400 and December 05 high at 0.6443.

NZD/USD four-hour chart

NZD/USD

Overview
Today last price0.6193
Today Daily Change-0.0024
Today Daily Change %-0.39
Today daily open0.6217
 
Trends
Daily SMA200.6243
Daily SMA500.6254
Daily SMA1000.6303
Daily SMA2000.616
 
Levels
Previous Daily High0.6265
Previous Daily Low0.6193
Previous Weekly High0.6389
Previous Weekly Low0.6207
Previous Monthly High0.6298
Previous Monthly Low0.6084
Daily Fibonacci 38.2%0.622
Daily Fibonacci 61.8%0.6237
Daily Pivot Point S10.6185
Daily Pivot Point S20.6153
Daily Pivot Point S30.6114
Daily Pivot Point R10.6257
Daily Pivot Point R20.6297
Daily Pivot Point R30.6329

Author

Sagar Dua

Sagar Dua

FXStreet

Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.

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