NZD/USD Price Analysis: Symmetrical triangle conveys volatility contraction, US NFP eyed

• NZD/USD is expected to display back-and-forth action ahead of the US NFP release.
• The Symmetrical Triangle formation is hinting a sheer volatility squeeze.
• A range shift by the RSI (14) into the 40.00-60.00 zone from the bullish range of 60.00-80.00 indicates a consolidation ahead.

The NZD/USD pair is demonstrating a sideways action below the immediate resistance of 0.6480 in the Asian session. The Kiwi asset has turned sideways as investors are awaiting the release of the Caixin Services PMI and United States Nonfarm Payrolls (NFP) data for fresh impetus.

Weak earnings have dented the three-day winning spell of the S&P500 futures, which are showing significant losses, portraying a risk aversion theme. The US Dollar Index (DXY) is looking to recapture Thursday’s high around 101.55 after a corrective move as investors’ risk appetite has faded significantly.

NZD/USD is auctioning in a Symmetrical Triangle chart pattern that indicates an extreme squeeze in volatility. The upward-sloping trendline of the chart pattern is placed from January 19 low at 0.6365 while the downward-sloping trendline is plotted from January 18 high at 0.6531. The Kiwi asset displayed a sheer fall on Thursday after failing to find buying strength post delivering a breakout, which resulted in a fakeout later and trapped investors at elevated levels.

The Relative Strength Index (RSI) (14) has shifted into the 40.00-60.00 range from the bullish range of 60.00-80.00, which indicates a consolidation ahead.

For the downside move, a breakdown below January 31 low at 0.6412 will drag the Kiwi asset toward January 17 low at 0.6366 followed by January 12 low around 0.6300.

On the flip side, the asset needs to surpass Thursday’s high at 0.6538 for resuming the upside move, which will drive the asset toward June 3 high at 0.6576. A breach of the latter will expose the asset to the round-level resistance at 0.6600.

NZD/USD hourly chart