Technical Analysis This week began with NZD/USD consolidating positively near the 0.5975 area within the opening hours of Asia, slightly lower than Friday's high point since mid-June. The bearish performance of NZD/USD was driven by weak New Zealand retail sales figures, which weighed heavily on the New Zealand Dollar. Nonetheless, positive developments related to the US dollar will help consolidate the currency pair. Indeed, from a technical standpoint, the bulls have gained another trigger following Friday's breakout beyond 0.5900. Currently, the pair holds well above the 200-period Simple Moving Average (SMA), standing near 0.5845, and thus the overall near-term sentiment is bullish. In addition, the MACD is marginally in the positive territory, and therefore positive for the bulls. Nonetheless, the RSI approaches 69, indicating robust upside momentum; however, it also signals tightness and overstretched conditions for further upside moves. However, a retreat below 0.5900 is seen to trigger fresh buying interest and help preserve the constructive setup. A decisive break below the 200-period SMA level of 0.5845 could then rule out any possibility of a bullish move and allow scope for further correction. As long as the NZD/USD pair remains supported by the floor, there seems to be room for more consolidation with a bullish bias. Notably, however, the NZD/USD pair has entered overbought territory on the RSI oscillator, suggesting a possible consolidation phase before the next higher wave. Thus, the psychological resistance level 0.6000 could maintain its role in offering some resistance. NZD/USD bulls need confirmation above the 0.6000 handle before considering entering new positions to push prices higher, targeting the recent strong rise from 0.5625 achieved in June.
