NZD/USD is set for further downside as decline continues
NZD/USD appears to be carving out a lower top after reversing back down from the November 28 high of 0.6945. The recent corrective move from 0.6780 stalled and downside momentum gained speed, turning the focus back to the downside.
Looking at the 4-hour chart, RSI is now in bearish territory below 50, suggesting the downside move still has legs, especially after strong resistance has been met at the 61.8% Fibonacci retracement level (0.6848) of the rise from 0.6780 to 0.6945.
Support is expected at the November 22 low of 0.6819 ahead of 0.6780. A further decline from this 1 ½-year low would bring about a resumption of the downtrend that started from the July peak of 0.7557.
Only a move back above 0.6870 (near the 50% Fibonacci) would help weaken the downside pressure. But since the market is trading below the 20- and 50-period moving averages, the outlook is quite negative.
USD/JPY firms up this week; remains trapped in medium-term range
USD/JPY maintains its medium-term trading range between 108 and 114.50 as a result of entering a consolidation phase after a rally to 118.66 in December 2016. The pair is now trading above the mid-point of the range.
USD/JPY has been closing above the key 111 in the past two months, making it a strong support level. Breaking below it would shift the focus back to the lower end of the range in the 108 area.
USD/JPY firmed up this week after bouncing off the 111 level. The short-term bias improved when prices rose above the 200-day moving average. This level at 111.65 is now expected to provide support.
RSI is ticking higher, suggesting the market has more upside potential in the near term. There is resistance at 112.75 (50-day MA) but pushing above it would help USD/JPY see further gains back towards the top of the range at 114.50. This level would be a challenge to break, however, if successful, there is scope to target the 118 level for a re-test of the December 2016 peak.
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