• The New Zealand dollar reaches overbought levels after an 8-day rally.
• Risk appetite and the correlation with the AUD are buoying the pair.
• NZD/USD rally is likely to meet strong resistance at 0.6375.

The Kiwi maintains its bid tone intact on Wednesday´s European session. Investors’ optimism about the end of the global tightening cycle has buoyed the risk-sensitive NZD, which is on track to an 8-day rally, reaching overbought levels in daily and hourly timeframes.

NZD´s correlation with the AUD has contributed to sustaining the rally. The hawkish minutes of the Australian Central Bank’s last meeting, released on Tuesday boosted the antipodean currencies, offsetting the impact of a poor New Zealand trade balance.

NZD/USD faces strong resistance at 0.6375

From a technical perspective, the pair seems in the last leg of a 5-wave impulse from 0.5775 lows with an important resistance at 0.6375. This is a previous resistance level and the 261% Fibonacci extension, which tends to be an exhaustion zone.

On the downside, Immediate support lies at the 0.6220 previous high, and below here, 0.6165 and the December 13 low at 0.6090.

Technical levels to watch