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Talking Points:
- NZD/USD Technical Strategy: Flat
- New Zealand Dollar Jumps Most in Three Months as Risk Appetite Recovers
- Waiting to Enter Short in Line with Long-Term Trend Following Correction
The New Zealand Dollar launched an impressive recovery against its US namesake after finding support near the 0.64 figure, surging to yield its largest daily gain in three months. The surge tracked a market-wide sentiment recovery as traders cheered the prospect of on-coming ECB stimulus expansion.
From here, a daily close above resistance at 0.6552 – the 38.2% Fibonacci retracement – opens the door for a challenge of the 50% level at 0.6615. Alternatively, a reversal below resistance-turned-support at 0.6474, the 23.6% Fib, paves the way for a test of the 0.6397-6429 area (horizontal pivot, November 18 low).
On balance, the long-term NZD/USD trend continues to favor a bearish bias. That paints the current upswing as corrective. As such, we will remain on the sidelines sand wait for the move to be exhausted and produce a bearish reversal signal to enter short.
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