NZDUSD fixing long positions is a catalyst for a price correction
NZDUSD fixing long positions is a catalyst for a price correction. After reaching the main selling target in the area of 0.6540, NZD/USD is reversing into a correction with the target of 0.6700 against the background of the weakening of the US dollar, which is falling from the high of 97.430 in the USD Index, reached last Friday, to the levels of 96.500-96.300 today. The negative trend is due to weak macroeconomic statistics published in the US on January 28.
Michigan Consumer Expectations Index in January turned out to be lower than preliminary estimates, amounting to 64.1 points against the projected 65.8 points. Michigan Consumer Sentiment Index for January also disappointed investors and amounted to 67.2 points against the forecast at 68.7 points. The release of negative statistics probably pushed US dollar buyers to fix long positions, which caused a correction in the markets. Traders should keep in mind that in March the US Fed may adjust the interest rate from 0.25% to 0.50%, which, in turn, can push the USD Index to new highs around 98.600-98.400.
Due to the difference in the monetary policy of the Reserve Bank of New Zealand and the US Federal Reserve, NZD/USD is likely to fall again with the target of 0.6400 after the correction.
Support and resistance
The long-term trend in NZD/USD is downward. Now a correction is being developed with the target of 0.6700, after reaching which it is worth considering new sales of the asset with the target at 0.6540, and in the case of breaking it down, the movement will continue to 0.6400. Traders should pay attention to the readings of the RSI indicator, which has generated a Divergence signal, which is a reversal pattern that suggests the development of a correction to a downtrend.
The mid-term trend is downward. Last week, traders broke through the target zone 3 (0.6648–0.6629). The next sell target is target zone 4 (0.6458–0.6439).
Resistance levels: 0.6700, 0.6864, 0.7055.
Support levels: 0.6540, 0.6400.