NZD/USD Price Analysis: Struggles near multi-month lows, seems vulnerable to slide further

• NZD/USD has now drifted back closer to multi-month lows touched earlier this Wednesday.
• A sustained break below a two-month-old trading range has set the stage for further weakness.
• The occurrence of death-cross and bearish oscillators add credence to the negative outlook.

The NZD/USD pair struggled to capitalize on the post-RBNZ recovery move, instead met with some fresh supply near mid-0.6900s. The pair retreated over 60 pips from daily swing highs and has now slipped back below the 0.6900 round-figure mark.

Worries that the continuous rise in new COVID-19 cases could lead to a global economic slowdown, along with political tensions in Afghanistan, continued weighing on investors' sentiment. This, to a larger extent, helped offset a subdued US dollar price action and was seen as a key factor exerting pressure on the perceived riskier kiwi.

From a technical perspective, the NZD/USD pair finally seems to have confirmed a bearish break below a two-month-old trading range. This comes on the back of the occurrence of a death-cross – wherein 50-day SMA has fallen below the very important 200-day SMA – supports prospects for an extension of the ongoing downward trajectory.

The negative outlook is reinforced by the fact that technical indicators on the daily chart have been drifting lower in the bearish territory and are still far from being in the oversold zone. Some follow-through selling below the daily swing lows, around the 0.6870-65 region, will reaffirm the near-term bearish bias.

The NZD/USD pair might then accelerate the fall towards intermediate support near mid-0.6800s before eventually dropping to the 0.6800 mark en-route the 0.6775-70 horizontal resistance breakpoint.

On the flip side, any meaningful recovery attempt might continue to confront some resistance near mid-0.6900s. A sustained move beyond might trigger a short-covering move and push the NZD/USD pair back towards the key 0.7000 psychological mark. This is closely followed by the 50-day SMA, around the 0.7015 region, which should cap the upside.

NZD/USD daily chart

Technical levels to watch