NZD/USD recovery plummets after failing to test June high

NZD/USD broke the August opening range after regaining the lead following the Reserve Bank of New Zealand (RBNZ) Interest Rate Decisionand the recent price action increases the possibility of a further decline in the exchange rate as it extends the series of lower highs and lower lows from last week.

In turn, the advance from the yearly low (0.6061) may continue to unravel as NZD/USD breaks back below the 50-day SMA (0.6253), and the exchange rate may follow the negative slope of the moving average as it appears to have reversed course after failing to test the high of June (0.6576).

NZD/USD daily rate chart

Source: Commercial view

The short-term rebound of USD/USD appears to have stalled after the failed break/close attempt above the 0.6470 (50% retracement) to 0.6490 (78.6% expansion) region, the Relative Strength Index ( RSI) highlighting similar momentum as it falls back past oversold territory.

The recent series of lower highs and lower lows have pushed NZD/USD to a new monthly low (0.6157), and the lack of momentum to hold above the 0.6170 area (50% expansion) could send the exchange rate to the 0.6070 (61.8% expansion).

Lack of defense yearly low (0.6061) opens the Fibonacci overlap around 0.5900 (78.6% retracement) to 0.5930 (78.6% expansion)with the next area of ​​interest around the April 2020 low (0.5843).

— Written by David Song, Currency Strategist

Follow me on Twitter at @DavidJSong

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