NZD/USD Price Analysis: Will the US dollar now give back some ground to the dollar bloc?


  • NZD/USD is testing the POC in a sell-off that has gathered pace over the last 24 hours.
  • The DXY is now at a level where a correction might be expected to the 93.60s, giving rise to a short-term upside bias in NZD.

The moves in the FX space have been driven by US dollar fundamentals and a shift in central bank and investor optimism. 

Technically, this makes for a series of confluence across the dollar bloc.

Starting with the DXY, we can see that the index has completed a technical breakout in a typical 3-wave pattern as follows on the daily chart:

If the above 5-wave pattern scenario plays out, then there is room for an upside correction in the dollar bloc currencies ahead of the next bearish impulse to the downside. 

Long above, short below the POC

The Point of Control, (POC), is lined up with the current market. 

The POC offers a bullish scenario while above it towards a test of prior structure and a bearish one below it to complete the formation of a monthly reverse head and shoulders. 

If the US dollar does indeed stall at this juncture and give back ground, the above scenario has a high probability of playing out.

Monthly reverse head and shoulders

From a monthly perspective, the formation of a reverse head and shoulders is an overall bullish scenario for the pair and rhymes with the volume point of control located towards the 0.73 area on a longer-term basis. 

 

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.

Feed news

Latest Forex News


Latest Forex News

Editors’ Picks

EUR/USD hits fresh two-month highs amid dollar weakness

EUR/USD has hit new two-month highs above 1.1940 as the dollar resumes its decline. Optimism about the US transition and covid vaccines is weighing on the safe-haven dollar. 

EUR/USD News

GBP/USD falls toward 1.33 amid Brexit acrimony

GBP/USD is falling toward 1.33 as both the EU and the UK are busy blaming each other for an impasse in Brexit talks. The thorny issues remain fisheries, governance and setting a level playing field.

GBP/USD News

XAU/USD attempting to bounce up from $1,775 low

Gold futures accelerated heir downtrend from last week highs near $1,900, breaking below the 200-day SMA, at $1,800 area, to hit its lowest prices in nearly five months, at $1,775.

Gold news

Dollar offered ahead of the weekend

Equities are finishing the week on a firm tone, while the US dollar remains heavy. In the Asia Pacific, only Australia and India did not end the week on a firm note.

Read more

Black Friday 2020 Discounts!

Learn to trade with the best! Don't miss the most experienced traders and speakers in FXStreet Premium webinars. Also if you are a Premium member you can get real-time FXS Signals and receive daily market analysis with the best forex insights!

More info

Forex MAJORS

Cryptocurrencies

Signatures