The NZD/USD pair experienced a sharp decline on Wednesday, plummeting towards the critical support zone formed by the converging 100 and 200-day Simple Moving Averages (SMAs) near 0.6070. This crucial juncture will determine whether the bearish momentum intensifies or the Kiwi manages to stage a recovery.

Technical Indicators Flash Bearish Signals

The daily chart’s Relative Strength Index (RSI) has plunged to 42, indicating a deepening bearish momentum. While not yet oversold, the declining trend highlights sellers’ dominance. The Moving Average Convergence Divergence (MACD) also displays rising red bars, further confirming the strengthening bearish sentiment.

Crucial Support and Resistance Levels to Watch

• Immediate Support: The 0.6070 level, coinciding with the 100 and 200-day SMA convergence, serves as the first line of defense for the Kiwi. A break below this support could trigger a deeper sell-off, potentially targeting 0.6050.
• Potential Resistance: On the upside, the former support level of 0.6100 now acts as resistance, followed by the 20-day SMA at 0.6145 and further resistance points at 0.6170 and 0.6200. A decisive move above these levels could signal a potential reversal of the current bearish trend.

Market Sentiment and Factors to Watch

The recent weakness in the NZD/USD pair is attributed to a combination of factors, including a stronger US Dollar, weaker-than-expected New Zealand economic data, and a risk-off sentiment in global markets. Traders are closely watching for any signs of stabilization or a potential rebound from the crucial support zone near 0.6070.