NZD/USD is lower in today’s trading, reversing the bulk of Thursday’s move to the upside. The pair is currently trading at 0.7197, down 0.47%.
NZD/USD moved sharply higher this week after the release the FOMC meeting minutes on Wednesday, advancing to test resistance at the February 16 high at 0.7242. This high tested and failed NZD/USD’s 20-day moving average and represents an approximate 50% retracement of the decline from the February high to the February reaction low.
These converging levels of resistance were able to turn the pair away and, as a result, a retest of first support is now possible.
First support represents the boundary of the current short term trading range at this week’s low and the low established on February 14. A breakout from the trading range is required to set the stage for the next broader move in the NZD/USD.
On a breakdown from the range, the next target is at the 61.8% retracement level of the advance from the December reaction low to the February intraday high at 0.7057. The bottom of the current trading range represents a 50% retracement of this advance as well as a test of the pair’s 50-day moving average.
On a move to the upside, the pair has the potential for a return to the February peak at 0.7376.