NZDUSD Technical Analysis – Watch this key level for another big selloff

<p>The strong USD weakness
seen after the miss in the US CPI report was completely erased as the US data
kept on printing on the hot side with the <a href="https://www.forexlive.com/news/usa-june-retail-sales-02-versus-05-expected-20230718/">US Retail Sales Control Group</a> beating expectations by a big
margin and the <a href="https://www.forexlive.com/news/us-initial-jobless-claims-228k-vs-242k-estimate-continuing-claims-1754m-vs-1729m-est-20230720/">US Initial Claims</a> returning to record low levels.
Yesterday, the <a href="https://www.forexlive.com/news/us-july-flash-sp-global-services-pmi-524-vs-540-expected-20230724/">US PMIs</a> painted a mixed picture with the Services PMI
missing expectations, although remaining in expansion, and the Manufacturing
PMI jumping from 46.2 to 49.0, almost rising back into expansion. </p><p>The <a href="https://www.forexlive.com/centralbank/reserve-bank-of-new-zealand-leave-cash-rate-unchanged-at-55-as-widely-expected-20230712/">RBNZ</a>, on the other hand, kept its official cash
rate unchanged while stating that it will remain at the restrictive level for
the foreseeable future to ensure that inflation comes down back to target. The
recent <a href="https://www.forexlive.com/news/new-zealand-q2-cpi-11-qq-vs-expected-10-20230718/">New Zealand inflation</a> data though surprised to the upside
which might put some pressure on the central bank at the next rate decision. </p><p>NZDUSD Technical Analysis –
Daily Timeframe</p><p>On the daily chart, we can see that the NZDUSD sold
off pretty heavily from the key 0.6389 resistance for an
entire week erasing all the gains made after the miss in the US CPI report. We
have finally seen a bounce yesterday, but the bias remains bearish at the
moment. </p><p>NZDUSD Technical Analysis –
4 hour Timeframe</p><p>On the 4 hour chart, we can see that the price
broke below the strong support zone at 0.6220 and it’s now coming back to
retest the level. We have some good confluence here
with the downward trendline, the
38.2% <a href="https://www.forexlive.com/Education/technical-analysis-using-fibonacci-retracements-20220421/">Fibonacci retracement</a> level
and the red 21 moving average adding
strength to the resistance. This is where the sellers should pile in with a
defined risk above the resistance and target the 0.6050 swing low level. The
buyers, on the other hand, will need the price to break above the resistance
with conviction to jump onboard and target the 0.6389 level. </p><p>NZDUSD Technical Analysis –
1 hour Timeframe</p><p>On the 1 hour chart, we can see more
closely the resistance zone with the price already reacting to the level. More
conservative sellers may want to wait for the price to break below the upward
counter-trendline to pile in and target the 0.6050 level. The buyers, on the
other hand, will have a stronger confirmation for the resumption in the uptrend
if the price rallies past the 61.8% Fibonacci retracement level and the last
swing high at 0.6239. </p><p>Upcoming Events</p><p>Today the only notable
event will be the US Consumer Confidence report where the market will want to
see if the last month incredibly strong report was just a blip. Tomorrow, the
Fed is expected to hike by 25 bps and the market will be focused on any hint of
a pause or further rate hikes. On Thursday, it will be the time for another US
Jobless Claims report while on Friday we conclude the week with the US PCE and
ECI reports. </p>

This article was written by FL Contributors at www.forexlive.com.