Navigating NZD/USD: Bearish Outlook Prevails Amidst Shifting Sentiment

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EnclaveFX Ltd
Aug 08, 2023
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The NZD/USD pair finds itself in a precarious position, mirroring the most prominent daily loss of the week so far. It hovers near 0.6060 during the European session on Tuesday. Recent market dynamics have shadowed the Kiwi pair, traced back to bullish attempts to regain control. This was done after breaking an upward-sloping support line in October.

NZD/USD buyers face many challenges. The pair's struggle to regain ground above the 200-day moving average (0.6230) and the descending resistance line that has shaped its trajectory over the past three weeks (around 0.6145) showcase the uphill battle they face. An added layer of complexity lies in that a meaningful recovery beyond 0.6230 seems unlikely unless the pair overcomes the peak seen in July. This peak rests around 0.6415.

On the flip side, there are hurdles preventing a short-term plunge. The 50% Fibonacci retracement level stemming from the upswing between October 2022 and February 2023, situated near 0.6025, acts as a potential buffer against immediate downside pressure. Should the pair drop further, June's low at 0.5985 becomes a notable support level. This is followed by the gravitational pull of the 61.8% Fibonacci retracement level around 0.5900.

The NZD/USD pair remains firmly in bearish sentiment's sights, poised to challenge the yearly low set in June around 0.5985. This movement aligns with the broader recovery of the US Dollar at the start of the week, compounded by subdued market sentiment. For further context, one might explore the pair's limited reaction to Chinese trade data and its ongoing struggle to break below the 0.6100 threshold.

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