NZDUSD is trading at a critical area ahead of the US CPI inflation data, challenging the resistance trendline, which connects all the highs from April’s peak at 0.6343, for the third consecutive day.
May’s upturn raised optimism for a bullish trend reversal as a double bottom pattern became more visible. Adding to the bright outlook is the clear positive trajectory in the RSI and the MACD, which point to constructive sessions ahead.
Nevertheless, only a clear extension above 0.6345-0.6375 would confirm a bullish market structure in the short-term picture, likely driving the price sharply up to the 0.6500-0.6550 important resistance zone. Should the pair resume its October-January uptrend above 0.6550, the next target might be the crucial long-term descending trendline from February 2021 seen at 0.6620.
In the event the price slips below the nearby support of 0.6330, the 23.6% Fibonacci retracement of the 0.5510-0.6536 upleg could immediately add a footing near 0.6288. A break below that base would put the double bottom pattern into question, likely extending the bearish wave towards the 0.6200-0.6140 region, where the simple moving averages (SMA) and the 38.2% Fibonacci level are placed. Another negative correction may threaten a downtrend resumption below the March low of 0.6083 and towards the 50% Fibonacci of 0.6020.
All in all, NZDUSD seems to be testing a make-or-break zone. A sustainable move above the 0.6345-0.0.6375 region could trigger an exciting rally, while a step below 0.6288 may renew selling pressures.
