The positive price action witnessed in the first half of the week, lost traction on Thursday with the pair unable to find acceptance above 0.5870 as risk appetite ebbed and the US dollar started to regain lost ground.

US dollar bulls, however, have remained subdued with the investors on a cautious mood ahead of next week’s Fed monetary policy meeting. The market has priced in a 0.75% hike on Wednesday, although the odds for a shorter hike in December have increased substantially over the last few days, which is holding back US dollar longs.

NZD/USD stays defensive above 0.5800, taking rounds to 0.5830 during Friday’s Asian session, following a pullback from the monthly top. In doing so, the Kiwi pair struggle to justify the previous day’s bearish Doji candlestick, as well as a failure to cross the 50-DMA hurdle.

It should be noted, however, that a steady rise in the RSI (14) without being near the overbought territory, suggests that the sellers have a tough fight ahead.

That said, a two-week-old ascending trend line and the previous resistance line from August 12, respectively near 0.5720 and 0.5700, could challenge short-term NZD/USD bears.

Following that, the 21-DMA level of 0.5682 could act as the last defense of the buyers, a break of which might not hesitate to challenge the yearly low marked earlier in the month around 0.5510.

Meanwhile, a daily closing beyond the 50-DMA hurdle surrounding 0.5870, appears necessary for the NZD/USD buyer’s return.

The following run-up can face a tough time as the 0.5900 threshold and the 0.6000 psychological magnet will be strong hurdles.

In a case where NZD/USD rises past 0.6000, September’s peak near 0.6165 will be in focus.

Kiwi to perform a hawkish maneuver after retest of 50 EMA

Oct 30 2022