NZDUSD stalled its recent rally and is hovering around the key 0.7100 level. The short-term outlook remains bullish. On the 4-hour chart, the 50 and 200-period moving averages are positively aligned and RSI is above 50.
While NZDUSD consolidates, immediate support is expected to be provided around the 0.7080 area. As long as this support holds, risk remains to the upside. But a break below the consolidation range would shift the bias to bearish and another leg lower would target the 0.7020 area which saw some congestion in the past and acted both as a support and resistance zone. A drop lower might imply the market is set to fall further to target 0.6900.
The short-term technical setup is still bullish and a sustained break above the January 2 peak of 0.7130 would confirm the start of another bullish phase, extending the recent uptrend. From here the market has scope to target 0.7200. But the longer time the pair trades sideways, the more the upside momentum will fade, risking more weakness in the market.
