NZD/USD Oversold on the Daily Chart
NZD/USD
The Kiwi comes from five straight losing weeks and started the day with fresh 2021 lows, as we had warned from the previous analysis. Omicron worries, increasingly hawkish Fed and indifference to RBNZ's rate hikes were the main drivers of its persistent weakness.
Despite the new lows earlier in the day, broader risk-on mood lifts the pair, which tries to react off its oversold levels, as indicated by the Relative Strength Index (RSI) on the Daily chart. RSI's previous visit to such levels was in late September and had led to a significant recovery of NZD/USD, while a similar pattern had been seen following the previous 2021 lows, back in August.
The decline pauses ahead of the 38.2% Fibonacci of the "Multiyear 2020 Lows/2021 High" rise (0.6702) - another factor that bodes well for further gains, but it is still too early to tell whether the pair can stage a broader recovery.
Past Performance: Past Performance is not an indicator of future results.
Scaling down to the 4-Hour chart, it has the ability to extend its gains to 0.6804, but a catalyst will be required to push it toward the 0.6852-0.6868 region.
The pair's rebound is still nascent and market sentiment is fragile, despite recent improvement. Bias remains tilted to the downside and the risk for new 2021 lows persists, although a break below 0.6702 may not be easy at this stage.
Past Performance: Past Performance is not an indicator of future results.
Nikos Tzabouras
Senior Market Specialist
Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.
With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.
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