The NZD/USD pair has printed a fresh weekly low at 0.6440 in the Asian session as investors' risk-taking ability has faded dramatically. The Kiwi asset has been dumped by the market participants as the US Dollar Index (DXY) is advancing vertically.

The risk aversion theme is impacting risk-sensitive assets like S&P500 futures, which have surrendered their entire gains recorded in Asia and have resumed their downside journey. Volatility in the market has accelerated ahead of the interest rate decision by the Federal Reserve (Fed).

NZD/USD has delivered a downside break of the consolidation formed in a range of 0.6451-0.6515 on a four-hour scale, which indicates a volatility explosion that set grounds for wider ticks and heavy volume. The asset has also delivered a breakdown of the Rising Wedge chart pattern, which indicates a bearish reversal.

The Kiwi asset has also surrendered the 23.6% Fibonacci retracement support (placed from January 6 low at 0.6190 to January 18 high at 0.6531) at 0.6450.

Also, the Relative Strength Index (RSI) (14) has shifted into the bearish range of 20.00-40.00, which indicates more downside ahead.

Going forward, a breakdown below January 16 high at 0.6426 will drag the Kiwi asset toward January 17 low at 0.6366 followed by January 12 low around 0.6300.

On the flip side, the asset needs to surpass Wednesday’s high at 0.6530 for a resumption in the upside, which will drive the asset toward June 3 high at 0.6576. A breach of the latter will expose the asset to the round-level resistance at 0.6600.

Kiwi to take an exit from consolidation

Jan 31 2023