NZD/USD: Off 19-day highs, 1H chart shows bearish RSI divergence

NZD/USD has backed off from 19-day highs amid losses in the S&P 500 futures.
The bearish divergence of the RSI seen in NZD/USD's hourly chart indicates scope for a deeper pullback.

Omkar Godbole FXStreet Contributor

The NZD/USD pair is currently trading largely unchanged on the day at 0.6883, having clocked a 19-day high of 0.6902 yesterday.

Buoyed by strong retail sales for the final quarter of 2018 and the US-China trade optimism, the Kiwi dollar jumped to the highest level since Feb. 6 yesterday.

The currency pair also closed above the resistance of the trendline sloping downwards from Feb. 1 and Feb. 18 highs.

So far, however, the follow-through to that bull breakout has been hardly bullish, possibly due to signs of risk-off in the US equity futures. At press time, the S&P 500 futures are down 0.16 percent.

Further, NZD/USD's hourly chart is showing a bearish divergence of the relative strength index (lower highs on RSI as opposed to higher high on price). The pair, therefore, could fall back to 0.6860-0.6850 in the next few hours.

RBNZ's Bascand was out on the wires earlier today stating that the central bank's plan to raise capital requirements for the banks will likely have a limited impact on the economy. The NZD barely moved in response to Bascand's comments.

Technical Levels

1. R3 0.6969
2. R2 0.6936
3. R1 0.6909
PP 0.6877
1. S1 0.685
2. S2 0.6817
3. S3 0.6791

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

EUR/USD breaks below 1.1800, two-week lows

EUR/USD’s selling pressure is gathering pace now, breaching below the key 1.1800 yardstick to hit new two-week troughs on Wednesday. The pair’s pullback comes on the back of marked gains in the US Dollar following US data releases and ahead of the publication of the FOMC Minutes.

GBP/USD reaches multi-day lows near 1.3500

GBP/USD reverses its initial upside momentum and is now adding to previous declines, approaching the 1.3500 region on Wednesday. Cable’s downtick comes on the back of decent gains in the Greenback and easing UK inflation figures, which seem to have reinforced the case for a BoE rate cut in March.

Gold battle to regain $5,000 continues

Gold is back on the front foot on Wednesday, shaking off part of the early week softness and challenging two-day highs near the $5,000 mark per troy ounce. The move comes ahead of the FOMC Minutes and is unfolding despite an intense rebound in the US Dollar.

Fed Minutes to shed light on January hold decision amid hawkish rate outlook

The Minutes of the Fed’s January 27-28 monetary policy meeting will be published today. Details of discussions on the decision to leave the policy rate unchanged will be scrutinized by investors.

Mixed UK inflation data no gamechanger for the Bank of England

Food inflation plunged in January, but service sector price pressure is proving stickier. We continue to expect Bank of England rate cuts in March and June. The latest UK inflation read is a mixed bag for the Bank of England, but we doubt it drastically changes the odds of a March rate cut.

Sui extends sideways action ahead of Grayscale’s GSUI ETF launch

Sui is extending its downtrend for the second consecutive day, trading at 0.95 at the time of writing on Wednesday. The Layer-1 token is down over 16% in February and approximately 34% from the start of the year, aligning with the overall bearish sentiment across the crypto market.