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  • The NZD/USD pair could extend its sell-off by taking out the 61.8% retracement level.
  • A new lower low could bring new selling opportunities.
  • Staying above 61.8% could announce that the correction ended.

The NZD/USD price plunged after reaching 0.6763 as the Dollar Index remains bullish despite temporary retreats. DXY’s further growth may help the greenback to appreciate versus its rivals. However, the price is in a corrective phase in the short term.

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Soon, the price could activate a downside reversal if it takes out the support represented by the 61.8%. Technically, the price action signaled strong sellers. As you already know, the USD is bullish as the Federal Reserve is expected to increase the Federal Funds Rate again in the May meeting. The New Zealand Dollar resumed its depreciation after the RBNZ raised the official cash rate from 1.0% to 1.5%, above 1.25% expected.

The New Zealand Business NZ Services Index was reported at 51.6 points versus 48.9 in the previous reporting period. Fundamentally, the USD was lifted by US data. For example, the housing Starts indicator was reported at 1.79M above 1.74 M estimates compared to 1.77 M in the previous reporting period. In comparison, Building Permits came in at 1.87M in March versus 1.83M forecasts and 1.86M in February.

NZD/USD price technical analysis: Swing down

nzd/usd price

The NZD/USD pair rebounded after finding support on the 61.8% (0.6722) retracement level. It retests the descending pitchfork’s lower median line (LML), representing a dynamic resistance.

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The price registered only a false breakout above the 0.6753 static resistance. Staying below the lower median line (LML) and having a valid breakdown below 61.8% could activate more declines. Taking out this critical support signals a potential bearish reversal. The NZD/USD pair activated a larger correction in the short term after failing to stay above the uptrend line and above the 38.2% retracement level.

A new lower low, dropping and closing below 0.6715, could help the sellers to catch a larger downside movement. However, only staying above the 61.8% retracement level and registering strong consolidation could announce that the downside movement is over, and the buyers could take it higher. This scenario could take action if the DXY develops a corrective phase.

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