NZD/USD Price Analysis: Bulls looking to seize control above 0.6525-30 confluence hurdle

• NZD/USD gained strong positive traction on Friday and climbed to a three-week high.
• The technical set-up favours bullish traders and supports prospects for further gains.
• Sustained break below the 0.6400 mark is needed to negate the constructive outlook.

The NZD/USD pair caught aggressive bids on the last day of the week and rallied to over a three-week top during the first half of the European session. Bulls are now looking to build on the momentum beyond the 0.6525-0.6530 confluence, comprising 200-period SMA on the 4-hour chart and the 38.2% Fibonacci retracement level of the 0.7035-0.6217 fall.

Signs that the  Fed could pause the rate hike cycle after two 50 bps hikes each in June and July amid the worsening economic outlook, along with the risk-on impulse continued weighing on the safe-haven US dollar. Apart from this, the Reserve Bank of New Zealand's hit at even higher rates going forward further benefitted the risk-sensitive kiwi.

Looking at the broader technical picture, the recent recovery from the YTD low has been along an upward sloping channel. This points to a well-established short-term bullish trend and supports prospects for additional gains. Some follow-through buying beyond the aforementioned 0.6525-30 confluence hurdle will reaffirm the near-term positive outlook for the NZD/USD pair.

Bullish traders might then lift the NZD/USD pair beyond the 0.6600 round-figure mark, towards the 50% Fibo. level resistance near the 0.6625 region. The momentum could further get extended towards the next relevant hurdle near the 0.6655 area, or the 50-day SMA, spot prices could aim to challenge the very important 200-day SMA, currently around the 0.6700 mark.

On the flip side, any meaningful pullback below the 0.6500 psychological mark now seems to find decent support near the lower end of the ascending channel, around the 0.6470-0.6465 region. This is followed by the 23.6% Fibo. level, just ahead of the 0.6400 mark, which if broken will negate the positive bias and prompt aggressive selling around the NZD/USD pair.

NZD/USD 4-hour chart

Key levels to watch