NZD/USD Sees Dip-Buying with Limited Follow-Through
The NZD/USD pair showed signs of dip-buying on Tuesday, although it struggled to maintain momentum. The positive sentiment in the market provided some support, but the resurgence in demand for the US Dollar (USD) acted as a hindrance to substantial gains.
Currently trading around the 0.6020 mark, the pair remains relatively unchanged for the day, just below a nearly two-week high reached earlier in the session, staying near the psychological level of 0.6000.
The Kiwi received some support from the overall positive tone in equity markets. However, the USD rebounded on expectations of at least one more interest rate hike by the Federal Reserve (Fed), capping the NZD/USD pair’s upside potential.
Looking at the technical aspect, the 0.6050 area aligns with the September monthly swing high and closely follows the 100-day Simple Moving Average (SMA) at around 0.6060. This level also corresponds to the 38.2% Fibonacci retracement level of the July-August decline and serves as a critical pivot point.
A sustained move above these levels could trigger further bullish sentiment, potentially targeting the 0.6100 mark and extending gains to the 0.6125-0.6130 range, representing the 50% Fibonacci retracement.
On the downside, if the pair weakens below 0.6000, it may find support near the 23.6% Fibonacci level, approximately in the 0.5980-0.5975 region. A convincing break below this level could lead the NZD/USD pair back to 0.5900, on its way to last week’s swing low around 0.5870. Further support lies in the mid-0.5800s or the year-to-date low.