The New Zealand dollar has fallen to its weakest level against the US dollar since 2009, as antipodean currencies come under extreme downside pressure.
NZD/USD technical analysis shows that the pair could be heading towards the 0.5500 support level and possibly much lower over the medium term.
NZD/USD medium-term price trend
The NZD/USD pair has fallen to its weakest level in more than a decade, as investors move away from antipodean and commodity-related currencies. The Reserve Bank of New Zealand also issued an emergency 75 basis point rate cut earlier this week.
RBNZ governor Adrian Orr also said that the virus was expected to have a severe impact on New Zealand’s people and economy over the coming year.
NZD/USD technical analysis shows that the pair could test towards the 0.5500 support level as a bearish head-and-shoulders pattern plays out to the downside.
The daily time frame also shows that a larger head-and-shoulders pattern is present, with the neckline of the pattern found around the 0.6170 level.
According to the size of the larger head-and-shoulders pattern, the NZD/USD pair could tumble 0.4700 level if the pattern reaches its full downside projection.
NZD/USD short-term price trend
NZD/USD analysis shows that the pair has a short-term bearish bias while the price trades above the 0.6180 level.
Looking at the one-hour time frame the latest decline has invalidated a large inverted head-and-shoulders pattern across the lower time frame.
The neckline of the pattern is found around the 0.6005 level, while the invalidation target of the bullish pattern could see the NZD/USD pair falling towards the 0.5700 level.
The 0.5900 and 0.5940 levels are currently seen as the strongest form of near-term term resistance for the NZD/USD pair if any price retracements occur.
NZD/USD technical summary
NZD/USD analysis highlights that a bearish head-and-shoulders pattern on the daily time frame is pointing to the 0.5500 level as a downside target. A larger bearish pattern is warning of a stronger decline towards the 0.4700 level.