NZDUSD Plunges for Three Consecutive Weeks

The NZDUSD has plunged for three consecutive weeks, declining by more than 4% as of the time of writing. Should the downward pressure persist, the Kiwi will see further reductions in the exchange rate. All eyes are on today’s Personal Consumption Expenditures (PCE) report, which may shed light on the future Federal Reserve’s decisions and their impact on the US Dollar and consequently, the NZDUSD exchange rate.

High Impact Economic Events

Friday 12:30 (GMT+0) – USA: Core PCE Price Index m/m (USD)

The NZD/USD has been in a downtrend since July 14, when the price broke below the Bearish Harami Japanese candlestick reversal pattern. Additionally, the formation of a chart pattern, known in technical analysis as a failure swing, paved the way for further reductions in the exchange rate. Specifically, the peak at 0.61532 failed to exceed the previous peak, and subsequently, prices fell below the trough of 0.60471, resulting in a failure swing. As the downtrend gained momentum, a third bearish signal confirmed the negative outlook for the Kiwi. In particular, a Death Cross between the 20-period and 50-period Exponential Moving Averages on July 18 saw prices below their corresponding dynamic trendlines.

Furthermore, the Momentum oscillator supports the bearish bias of the NZD/USD as it registers values below its 100 baseline. Attaching the Fibonacci Retracement tool to the failure swing reversal, three potential price targets may be estimated. On another note, the Relative Strength Index moved into the oversold area below 30, warning of a potential reversal to the upside.

Should the buyers seize market control, traders may direct their attention toward the five potential resistance levels below:

0.59595: The primary resistance level is seen at 0.59595, corresponding to the 23.6% Fibonacci Retracement down from the peak of 0.62213 down to the daily low, 0.58785, marked on July 25.

0.60092: The second resistance is determined at 0.60092, calculated as the 38.2% Fibonacci Retracement of the decline between 0.62213 and 0.58785.

0.60471: The third resistance level is positioned at 0.60471, aligning with the trough of the failure swing, which was marked on July 2.

0.61532: The fourth resistance is 0.61532, representing the peak of the failure swing formed on July 8.

0.62213: An additional resistance is identified at 0.62213, coinciding with the peak marked on June 12.

Should the sellers maintain market control, traders may consider the three potential support levels listed below:

0.58514: The primary downside target is established at 0.58514, reflecting the daily low recorded on April 19.

0.57729: The second level of support is 0.57729, representing a weekly low.

0.57038: The third support line is identified at 0.57038, calculated as the 423.6% Fibonacci Extension between the swing low of 0.60471 and the swing high of 0.61532.

The NZDUSD has experienced significant downward pressures, dropping over 4% in the last three weeks. Technical factors, including a failure swing and a Death Cross, triggered the decline along with geopolitical events. Key economic data, such as the upcoming PCE report, will be critical in determining future movements of the US Dollar and, consequently, the NZDUSD exchange rate. Traders should closely monitor key resistance and support levels as they navigate this volatile period.