The NZD/USD currency pair has been on a downward trend, currently trading around 0.5780 during the European session on Wednesday. This marks an extension of its decline for the second consecutive day.
A look at the daily chart through technical analysis reveals a growing bearish bias. The pair is locked within a descending channel pattern, which is a significant indication of the ongoing downward pressure. Moreover, it continues to trade below both the nine- and 14-day Exponential Moving Averages (EMAs). This situation points to weak short-term price momentum, suggesting that the pair lacks the immediate strength to stage a significant upward rally.
The 14-day Relative Strength Index (RSI) is another crucial indicator worth noting. It is currently falling towards the 30 level, which is a clear reflection of the predominantly bearish sentiment in the market. Should the RSI drop below the 30 mark, it would signify an oversold condition. In such a scenario, there is a possibility that an upward correction could be triggered as traders might see it as an opportunity to buy the currency pair at a relatively undervalued state.
When it comes to support and resistance levels, the immediate support for the NZD/USD pair is at the two-year low of 0.5772, which was last witnessed in November 2023. If the pair breaks below this critical level, it would further 强化 the bearish sentiment and potentially drive it towards the lower boundary of the descending channel, which is at the 0.5720 level.
On the upside, the pair may encounter initial resistance at the nine-day EMA, which is positioned at the 0.5839 level. Beyond that, the upper boundary of the descending channel at the 0.5850 level stands as another hurdle. However, if the NZD/USD pair manages to break above this channel, it would undermine the bearish bias and open the door for it to move towards the region around its four-week high of 0.5930 level. Traders and investors will be closely watching these key levels as they could determine the future direction of the currency pair in the near term.
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