The NZD/USD currency pair has been trading sluggishly, lingering near 0.5650 during the Monday European session. A glance at the daily chart’s technical setup reveals a persistent bearish sentiment, with the pair locked within a descending channel pattern.
This bearishness is further emphasized by the fact that the NZD/USD is trading beneath both the nine- and 14-day Exponential Moving Averages (EMAs). Such a position indicates weak short-term price momentum, suggesting that downward pressure on the pair is likely to persist in the immediate future.
However, there are signs that could prompt a short-lived reprieve. The 14-day Relative Strength Index (RSI) currently sits below 30, a classic indication of an oversold market. This oversold condition may trigger an upward correction, injecting some volatility into the otherwise subdued trading.
When it comes to potential support levels, the NZD/USD pair is expected to test the lower boundary of the descending channel, which stands at the 0.5630 mark. Should this fail to hold, the next line of defense is the 26-month low of 0.5607, recorded on December 19.
On the upside, the pair will first encounter resistance at the nine-day EMA, positioned at 0.5708. After that, the 14-day EMA at 0.5743 awaits. If the NZD/USD manages to break above this latter level, it could boost short-term price momentum, potentially allowing the pair to then test the upper boundary of the descending channel, located around the 0.5800 level.
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