NZD/USD is currently testing a major support level, visible on the 4-hour forex time frame. Stochastic is already moving in the oversold area but has yet to cross higher and indicate a potential return of bullish momentum.
Over the weekend, New Zealand reported a weaker than expected trade balance reading and led the Kiwi to start the week on a weak note. Take note though that other economic reports from the country released earlier in the month showed signs of resilience in hiring and consumer spending.
If the support area holds, NZD/USD could make its way back to the middle of the range or the next resistance area near the .8650 minor psychological level. A downside break could be indicative of a longer-term selloff, perhaps until the .8000 major psychological support.
By Kate Curtis from Trader’s Way