The NZD/USD pair is currently facing significant downward pressure, trading at approximately 0.5550 during Monday’s European session. This marks a continuation of its declining trend that has persisted since early January. An examination of the daily chart reveals a bearish sentiment as the pair hovers near the lower boundary of a descending channel.
The 14-day Relative Strength Index (RSI) indicates that the market is oversold, remaining below the critical 30 threshold. This situation often suggests the possibility of a corrective bounce. However, should the RSI remain near this level, it may amplify the bearish outlook. Furthermore, the NZD/USD is positioned below both the 14- and nine-day Exponential Moving Averages (EMAs), hinting at weak short-term momentum and a sustained likelihood of further declines.
In terms of support levels, the NZD/USD pair is approaching the lower edge of the descending channel at 0.5540. Should this level fail to hold, the next support is at 0.5526, which represents the lowest point recorded since October 2022.
On the flip side, initial resistance for the pair appears around the nine-day EMA at 0.5596, followed closely by the 14-day EMA at 0.5615. A rally past these resistance levels could signal a shift in market dynamics, potentially allowing the pair to test the upper boundary of the descending channel at the significant psychological level of 0.5700.
Overall, the NZD/USD pair remains firmly in a bearish phase, but technical indicators suggest a possible avenue for recovery should momentum shift in the near term.
