The NZDUSD currency pair had been riding a steep uptrend since hitting a low of 0.5772 in 2023, consistently marking higher highs. However, this bullish ascent hit a roadblock near the 78.6% Fibonacci retracement level of the 0.6536-0.5772 downleg, prompting a substantial pullback. In recent trading sessions, NZDUSD extended its bearish momentum, breaching the critical 50-day Simple Moving Average (SMA). This notable breach has raised concerns among traders and investors, prompting an analysis of the potential support and resistance levels that lie ahead.
If the prevailing bearish pressures persist and the price continues its descent, the next significant support level to watch is the 38.2% Fibonacci retracement level of 0.6064. A dip below this level could usher in further downside momentum, potentially testing the 23.6% Fibonacci retracement level at 0.5952. In the event of a violation of this region, the pair may target the September low of 0.5858, a level that also acted as a robust support zone in November.
Conversely, if NZDUSD attempts to recover from its recent correction, the initial hurdle for the bulls could be the 50.0% Fibonacci retracement level at 0.6154. Further advances may encounter resistance around the 61.8% Fibonacci retracement level of 0.6244. A breakthrough above this barrier might lead to a challenge of the 78.6% Fibonacci retracement level at 0.6373, a zone that capped the pair's uptrend in late December.
In summary, NZDUSD bears have taken control in recent sessions, propelling the currency pair to a fresh one-month low. The pivotal test of the 200-day SMA looms on the horizon, and its outcome could determine whether the ongoing retreat gains further momentum or if a potential reversal is in the cards. Traders will closely monitor these key support and resistance levels to assess the currency pair's near-term direction.
