NZD/USD: Bears squeezed until key confluence level around R1
- NZD/USD is consolidating where the 21 and 50-D SMAs cross marking a firm resistance with the confluence of R1.
- Dollar weakness enables bulls an extra leg up within the New Year's correction from the flash crash lows.
NZD/USD bears have been squeezed again due to continued weakness in the greenback following the dovish rhetoric that Powell delivered on Friday and a risk-on outcome on the back of improved sentiment for Sino and US trade relations. Accompanying this, the news of the PBoC’s policy easing has also lifted spirits which in turn has supported a rally in the antipodes.
Plenty for markets to be nervous about
"For now, this cross may struggle to go much higher, approaching resistance. And there’s plenty for markets to be nervous about, making us circumspect about the scope for further NZD strength. Nonetheless, global events look set to determine moves this week, with little data on the domestic front," analysts at ANZ Bank explained.
Bulls have taken back the 23.6% Fibo at 0.6663 and are finding resistance at a key confluence of the 21 and 50-D SMA meeting R1. Beyond there, we have R2 located at 0.6800. R3 is located at 0.6849 which will take out the 38.2% Fibo of 0.6810. The 50% Fibo is located at 0.6929 guarding the December high of 0.6969. On the flip side, a break of the 100-D SMA at 0.6679 with daily closes will sure up the negative bias again, especially on a break back below the 23.6% Fibo.