The currency pair dropped aggressively and has erased the last month’s gains. It has dropped as much as 0.6989 level and has now has squeezed a little. Price dropped sharply as the USDX has managed to reach fresh new highs in the yesterday’s trading session. A USDX’s further increase will force the USD to appreciate even more on the short term versus all its rivals.

Technically, the NZD/USD it could be attracted by a dynamic support line, so it is expected to drop much more. The rate increased a little and now is trying to test a broken static support.

The rate dropped more than 370 pips and seems unstoppable, we don’t have any reversal signal. However, we’ll see a minor rebound if the USDX will slip lower.

The Kiwi increased on the mixed new Zealand data, the Employment Change rose by 0.6%, beating the 0.5% estimate and the 0.4% growth in the former reading period, the Unemployment Rate surged by 4.4%, matching the 4.4% estimate, while the Labor Cost Index increased by 0.3%, but less versus the 0.5% estimate.

You should be careful because the US session could bring a high volatility as the US is to release high impact data. The FOMC Statement and the Federal Funds Rate will shake the currency market.

You can see that the rate is pressuring the broken 61.8% retracement level. A rejection from here will send the rate towards fresh new lows. The next major downside target will be at the median line (ML) of the red descending pitchfork.

The current drop is natural and was expected after the failure to 0.7436 high. It has shown some exhaustion signs after the failure to approach and reach the median line (ml) of the black ascending pitchfork.

Only a failure to reach the median line (ML) will signal a major oversold and a potential upside movement towards the upper median line (UML).