NZDCHF recently broke out of its long-term descending channel to indicate that a reversal from the downtrend is about to follow. Price is pulling back to the broken resistance for a retest.

If this area keeps holding as support, NZDCHF could recover to the swing high at .6500 or to the higher upside targets marked by the Fibonacci extension tool. The 50% level is at .6534 then the 61.8% level is at .6557. Stronger bullish pressure could take it up to the 76.4% level at .6587 or the full extension at .6635.

The 100 SMA is still below the 200 SMA to indicate that the path of least resistance is to the downside or that there’s a chance for the selloff to resume. However, the gap between the indicators has narrowed to signal a likely bullish crossover, and price is trading above both dynamic inflection points.

Stochastic is already dipping into the oversold region to reflect exhaustion among sellers, so turning higher would confirm that buyers are returning. RSI, on the other hand, has room to slide to reflect a continuation of bearish momentum.

The Kiwi could get a boost from the RBNZ statement this week, as the central bank is likely to hike interest rates by 0.25% from 0.25% to 0.50%. Recall that the RBNZ already committed to reducing its asset purchases in the earlier rate statement, so another hawkish move is expected.

Also, New Zealand has posted stronger quarterly inflation and employment numbers for Q2 2021, confirming that it is weathering the pandemic better than most countries. This could be enough reason for the central bank to start withdrawing stimulus, opting to maintain price stability from here on.

Meanwhile, there are no major reports lined up from Switzerland, so the franc could function mostly as a counter currency.