The NZD/USD pair attracts fresh buying near the 0.6200 mark on Thursday and builds on its steady intraday ascent through the early European session. The pair is currently placed just below mid-0.6200s, up over 0.25% for the day, and for now, seems to have stalled the overnight rejection slide from a technically significant 50-day Simple Moving Average (SMA).

Hence, it will be prudent to wait for strong follow-through and sustained strength above the 50-day SMA before positioning for any further appreciating move for the NZD/USD pair. Investors also seem reluctant and might prefer to wait for the release of the US Core PCE Price Index - the Fed's preferred inflation gauge on Friday - before placing aggressive directional bets. In the meantime, Thursday's US economic docket, featuring the final Q4 GDP print and Initial Weekly Jobless Claims, might influence the USD and provide some impetus to the major later during the early North American session.

From a technical perspective the pair is precariously positioned at the lower boundary line of a rising wedge pattern which has formed in the midst of NZD/USD's medium term downtrend. The pair's first attempt to breakout from the wedge on March 27, failed and the second attmept on Wednesday has equally reversed and seen prices recover. Given the longer term bearish picture, however, the pair looks vulnerable to a breakout lower. Such a breakdown would require confirmation from pushing below the March 27 lows at 0.6180 but if successful would probably fall to an initial target of 0.6160 and the 200-DMA, followed by 0.6120 – the 61.8% extension of the height of the wedge – and in a more bearish scenario, to 0.6060, the 100% extension.

Kiwi has reached the liquidity zone for more downside

Mar 30 2023