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  • NZD/USD plunged as the Dollar Index has managed to increase after finding support on the 150% Fibonacci line.
  • The pair is pressuring critical dynamic support. As a result, a valid breakdown may signal a larger drop.
  • Technically, a valid breakout from the current range could bring us a clear direction.

The NZD/USD price drops right now as the Dollar Index has managed to rise. The pair stands at 0.7010, far below 0.7061 yesterday’s high. It approaches a critical dynamic resistance. A valid breakdown may signal further drop and could invalidate a potential bullish reversal.

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The NZD/USD pair continues to move sideways on the 4-hour chart, so only a valid breakout from this range could bring us a clear direction. The pair dropped after the US reported positive data earlier.

The bias is bearish in the short term. Only DXY’s drop could help the NZD/USD pair to start rising again. The NZ Manufacturing Index and the Visitor Arrivals indicators will be released tomorrow, but I don’t think that will impact the NZD/USD price a lot.

The US Prelim UoM Consumer Sentiment is expected to remain steady at 81.2 points. Better than expected data could help Greenback to increase versus its rivals.

DXY technical analysis

DXY 4-hour price chart
DXY 4-hour price chart

DXY jumped above the 93.00 psychological level again after the US PPI, and Core PPI came in better than expected. Also, the Unemployment Claims dropped to 375K as expected in the previous month.

The index has found support on the 150% Fibonacci line, and now it tries to come back towards the weekly R1 (93.14). However, DXY is traded below a strong resistance area, so a bearish pattern could signal a potentially significant drop.

NZD/USD price technical analysis: Bullish invalidation in preparation

NZD/USD 4-hour price chart
NZD/USD 4-hour price chart

The NZD/USD pair dropped and pressuring the ascending pitchfork’s lower median line (LML). However, the bias is still bullish as long as the price stays within the ascending pitchfork’s body. Unfortunately, it has failed to stabilize above the 38.2% retracement level and beyond the 50% Fibonacci line.

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A valid breakdown through the lower median line (LML) could signal a deeper drop ahead. Its failure to reach the 50% (0.7098) retracement level signaled that the NZD/USD pair could come back towards the range’s support.

Technically, a false breakdown with a bullish pin bar through the lower median line (LML) or a major bullish engulfing may signal a new upside momentum.

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