FxWirePro: NZD/USD rejected at 55-EMA, poised for further downside

Chart - Courtesy Trading View 

NZD/USD was trading rangebound with session high at 0.5838 and low at 0.5799.

The pair is extending weakness after back-to-back Inverted Hammer formations on the previous candles.

Upside remains capped at 55-EMA and daily cloud, the pair is poised to extend weakness after rejection at 55-EMA.

China’s Caixin Services PMI for October slipped to the lowest level in five months, printing at 48.4 versus 49.3 prior, denting the antipodean.

Further, escalating geopolitical tensions between North Korea and Japan join the risk-negative covid news from China to add to the downside pressure.

US 10-year bond coupons ease to 4.096% while its two-year counterpart snaps a four-day uptrend as it drops to 4.611%. 

Traders focus on the US ISM Services PMI, forecasted to ease to 55.5 in October compared to 56.7 previous readings. Friday’s US Nonfarm Payrolls (NFP) will also be critical, after a strong ADP report. 

Rejection at 55-EMA and cloud resistance has raised scope for further downside. Stochs and RSI have turned bearish. 

Major Support Levels: 

S1: 0.5762 (21-EMA)

S2: 0.5706 (20-DMA)

Major Resistance Levels: 

R1: 0.5816 (5-DMA)

R2: 0.5863 (55-EMA)

Summary: NZD/USD poised for further weakness. 21-EMA at 0.5762 in sight. Break below will drag the pair lower.