NZD/USD Price Analysis: Sets to extend gains towards 0.6500

The NZD/USD pair is juggling in a narrow range of around 0.6430 in the early Asian session. The Kiwi asset has turned sideways after refreshing the monthly high at 0.6437 despite the risk-off market mood. S&P500 futures are displaying more losses, portraying a further decline in investors’ risk appetite after hawkish commentary from Richmond Federal Reserve (Fed) Bank President Tom Barkin.

The US Dollar Index (DXY) has turned sideways around 102.00 after a V-shape recovery and is expected to extend gains amid a risk-aversion theme. Also, rising 10-year US Treasury yields are likely to infuse fresh blood into the safe-haven assets.

NZD/USD has delivered a breakout of the Bullish Pennant chart pattern that indicates a continuation of the upside momentum after consolidation on an hourly scale. Usually, the consolidation phase of the chart pattern serves as an inventory adjustment in which those participants initiate longs, which prefer to enter an auction after the establishment of a bullish bias.

The 20-and 50-period Exponential Moving Averages (EMAs) at 0.6415 and 0.6401 respectively have resumed their upside journey, which adds to the upside filters.

Meanwhile, the Relative Strength Index (RSI) (14) is still struggling to shift into the bullish range of 60.00-80.00. An occurrence of the same will trigger a bullish momentum.

For further upside, the Kiwi asset needs to break above Tuesday’s high at 0.6439, which will drive the asset towards December 15 high at 0.6470 followed by December 13 high at 0.6514.

Alternatively, a break below Monday’s low at 0.6361 will weaken the New Zealand Dollar and will drag the Kiwi asset towards January 12 low at 0.6304. A slippage below the latter will expose the asset for more downside toward December 28 low at 0.6263.

NZD/USD hourly chart