NZDUSD dropped to the lowest level since May 2020 before bouncing off 0.5940 on Friday. The recovery, however, remains unattractive as the Kiwi pair stays inside a six-week-old bearish channel. Even so, the oversold RSI conditions may allow short-term buyers to aim for 0.6100-10 resistance confluence, including the 21-DMA and the stated channel’s upper line. It’s worth noting that multiple lows marked during late July and early August could act as extra upside filters around 0.6220, a break of which could quickly propel the prices towards the previous monthly top near 0.6470.
Alternatively, a convergence of the aforementioned channel’s bottom and a downward sloping support line from May 12 constitute the 0.5890 level as a crucial downside support for the NZDUSD bears to watch during the pair’s further declines. Also acting as an extra check for sellers is the 61.8% Fibonacci Extension (FE) of the pair’s April-August moves, near 0.5870. If at all the Kiwi pair breaks the 0.5870 support, the odds of its south-run towards the 78.6% FE level surrounding the 0.5700 threshold can’t be ruled out.
Overall, NZDUSD remains in a bearish trend ahead of the key FOMC meeting, as well as today’s speech from RBNZ Governor Adrian Orr.