Slides below ascending channel/100-hour SMA confluence support

NZD/USD edged lower on Friday and retreated further from multi-year tops set on Thursday.
Slide below the 0.7050 confluence support might have set the stage for additional weakness.

The NZD/USD pair witnessed some profit-taking on Friday and extended the previous day’s retracement slide from the highest level since April 2018 – levels just above the 0.7100 mark. The pullback extended through the first half of the European trading session and dragged the pair below mid-0.7000s or two-day lows in the last hour.

With the latest leg down, the NZD/USD pair has now broken through a confluence support comprising of 100-hour SMA and the lower boundary of a near two-week-old ascending trend-channel. A short-term bearish breakdown is further reinforced by the fact that technical indicators have been gaining negative traction on hourly charts.

Moreover, oscillators on the daily chart are still holding in the overbought territory. The technical set-up supports prospects for an extension of the ongoing corrective slide, possibly towards testing the key 0.7000 psychological mark. That said, a softer tone surrounding the USD might help limit deeper losses ahead of the NFP report.

On the flip side, the 0.7060-70 congestion zone now seems to act as immediate resistance. A sustained strength above should assist the NZD/USD pair to make a fresh attempt to build on its recent positive momentum beyond the 0.7100 mark. The latter coincides with the trend-channel resistance and should act a key pivotal point for short-term traders.