NZD/USD recovers the heaviest daily fall in 12 days around 0.7170 during early Friday. The kiwi pair refreshes a four-month high the previous day before reversing from 0.7218, ultimately printing the negative daily closing. While inflation woes could be held responsible for the quote’s pullback on Thursday, the recent recovery seems to track headlines concerning the US stimulus and China’s Evergrande, not to forget easing COVID-19 restrictions at home. The pair managed to regain positive traction on the last day of the week and has now reversed a major part of the overnight retracement slide from the highest level since June. Reports that China Evergrande made funds available for a bond coupon to a trustee account helped ease concerns about a credit crunch in China's real estate sector. This, in turn, undermined the safe-haven US dollar and acted as a tailwind for the perceived riskier kiwi.

BULLISH AND BEARISH CONDITIONS/ POSSIBILITIES : (TECHNICALS)

NZD/USD teases bull cross on the daily chart but overbought RSI challenges further upside around 61.8% Fibonacci retracement (Fibo.) of February-August downturn at 0.7210, suggesting a pullback before the next move up. While a daily closing below September’s high surrounding 0.7170 directs the quote towards 50% Fibo. level near 0.7135, any further weakness will be challenged by an eight-month-old previous resistance line, close to 0.7080 by the press time. NZDUSD is also bullish above our upper trend line and needs to break below with an impulsive bearish approach that might open doors for further losses towards exponential moving averages 50 and 200 in the daily time frame. 

NZDUSD

Oct 23 2021