• NZD/USD remains depressed for the third straight day and hits a fresh multi-week low.
• The overnight breakdown through the 0.6145-0.6140 confluence favours bearish traders.
• Bears might now aim back to retest sub-0.6000 levels, or the YTD trough touched in May.

The NZD/USD pair edges lower for the third successive day – also marking the sixth day of a negative move in the previous seven – and drops to its lowest level since late June on Thursday. Spot prices remain on the defensive, around the 0.6070-0.6065 region through the early part of the European session and seem vulnerable to extending a three-week-old descending trend.

Against the backdrop of this week's failure near a technically significant 200-day Simple Moving Average (SMA), the overnight breakdown through the 0.6145-0.6140 confluence support was seen as a fresh trigger for bearish traders. The said area comprises the 61.8% Fibonacci retracement level of the May-July rally and an ascending trend-line extending from the YTD trough. This should now act as a pivotal point and cap any attempted recovery for the NZD/USD pair.

Meanwhile, technical indicators on the daily chart are holding deep in the negative territory and are still far from being in the oversold territory, adding credence to the bearish outlook for the NZD/USD pair. Some follow-through selling below the 0.6050 area (June 29 low) will reaffirm the negative bias and make spot prices vulnerable to accelerate the downward trajectory towards the 0.6000 psychological mark en route to the YTD low, around the 0.5985 region touched in May.

On the flip side, the 0.6100 round figure now seems to act as an immediate barrier ahead of the 0.6140-0.6145 confluence support breakpoint, now turned resistance. A sustained strength beyond might trigger a short-covering rally and allow the NZD/USD pair to aim back to reclaim the 0.6200 mark, which coincides with the 50% Fibo. level. This is closely followed by the 200-day SMA, around the 0.6220-0.6225 region, which if cleared could negate the negative outlook.

NZD/USD daily chart

Key levels to watch