NZD/USD makes corrective move higher to pause broader downtrend but upside momentum fades
NZD/USD maintains its downtrend from the September 20 high of 0.7434 but downside momentum has paused at 0.6817. The short-term bias has shifted to the upside after a strong rebound lifted the pair to 0.6942 earlier today. There were bullish signals on the 4-hour chart, as the market is now trading above the 20 and 50-period moving averages. Oscillators are bullish leaning.
Good support is expected on dips in the near term but if prices break below 0.6817 this would confirm the resumption of the broader downtrend for a move to the next major low at 0.6674.
To the upside, NZDUSD needs to rise above 0.7055 to relieve immediate downside pressure but only a move above key resistance at the psychological 0.7200 level would shift the bias to a more bullish one. Further strength would see another leg up to 0.7343 and open the way for a re-test of 0.7434. At this stage, the trend would turn to bullish with scope to target the 0.7557 peak.
The current corrective move may not have enough upside momentum but there are no clear signs of a reversal in the broader downtrend yet. A drop below 0.6817 would put another lower top in place.
USDJPY neutral after recent bullish run pauses at top of broader 7-month range
USDJPY has been trading in a broad range during the past 7 months, roughly between 108.00 and 114.00. In the shorter time frame, the pair has turned neutral after a bullish run took it to the top of the longer-term range.
Strong resistance at the October 27 high of 114.45 needs to be broken in order to indicate the start of a new bullish phase and target the next major highs at 115.52. and then 118.60.
A drop below Tuesday’s low of 112.95 would turn the focus to the 200-day moving average at 111.72. Breaking below this would bring further weakness and open the way to the bottom of the range at 108.00.
USDJPY is expected to remain neutral in the 112.95-114.45 range in the short-term but price signals are leaning towards bullish, suggesting that risk is tilted to the upside. Technical indicators such as RSI and MACD are in their respective bullish territories, although lacking momentum. The Ichimoku cloud analysis is also bullish. The market is above the cloud, while the Tenkan-sen and Kijun-sen lines are positively aligned.