In a challenging week for the NZD/USD pair, the currency pair has been persistently rebuffed by the 20-day Simple Moving Average (SMA), a key resistance level that has thwarted upward momentum for the fourth time in a row. This repeated rejection suggests a strong bearish trend on the horizon, pointing to more potential downside for the NZD/USD as technical indicators intensify the case for selling pressure.
Persistent Resistance at the 20-Day SMA
Friday’s trading session saw the NZD/USD close at 0.5960, down by 1.05%. For the third consecutive session, the pair failed to breach the 20-day SMA, reinforcing the resistance level and reflecting a lack of buyer strength to push prices higher. Repeated rejections at this level indicate mounting pressure on sellers and signal a robust trend toward further declines.
The current trading range for NZD/USD remains narrow, between 0.5940 and 0.6030. A definitive break below 0.5940 could solidify the bearish trend, possibly triggering further selling pressure. Conversely, a successful breakout above 0.6030 may hint at a potential reversal, though current indicators suggest such a move is unlikely in the near term.
Technical Indicators: Selling Pressure on the Rise
Relative Strength Index (RSI)
The Relative Strength Index (RSI) stands at 40 and continues its slide in negative territory, suggesting that bearish sentiment is strengthening. The RSI’s downward trajectory highlights escalating selling interest, signaling that buyers may remain subdued for now. As RSI approaches the oversold range, it may prompt caution among traders, although current momentum favors sellers.
Moving Average Convergence Divergence (MACD)
The Moving Average Convergence Divergence (MACD) indicator paints a mixed picture for NZD/USD, with the histogram in positive territory but gradually declining. This hints that any buying pressure is waning, diminishing prospects for a swift rebound. The declining MACD histogram reinforces the broader bearish sentiment, underscoring the potential for continued downside in the pair.
Also read : NZD/USD Price Forecast- Breaks Above 0.6000, Testing Key Resistance Levels Amid Bearish RSI Below 50
Bearish Outlook: Market Sentiment and Potential Triggers
The strong resistance at the 20-day SMA, combined with weakening technical indicators, suggests that NZD/USD may continue its downtrend. Market sentiment has leaned toward risk aversion amid concerns about global economic uncertainty, which can exert additional downward pressure on risk-sensitive pairs like NZD/USD. In particular, market players are closely watching upcoming economic data releases and central bank announcements, as any hawkish stance from the U.S. Federal Reserve could strengthen the USD, adding further downside for the NZD/USD pair.
