GBPNZD is testing its ascending trend line on its hourly time frame, with price hovering at the area of interest or former resistance at the 2.1000 area.

This is right around the 61.8% Fibonacci retracement level and the 100 SMA dynamic inflection point, which adds to its strength as support. The 100 SMA is above the 200 SMA to signal that the uptrend is more likely to resume than to reverse.

In that case, GBPNZD might make its way back up to the swing high at 2.1175 or higher soon. Stochastic is already turning higher from the oversold region to signal a return in bullish momentum, and the oscillator has plenty of room to climb before reflecting exhaustion among buyers.

Similarly RSI is also on the move up, so GBPNZD might keep following suit while bullish pressure is present. A break below the 200 SMA dynamic inflection point, however, might signal that a reversal is still possible.

There are no major reports due from both the UK and New Zealand for the rest of the week, though, so price action might hinge on mid-tier data or overall market sentiment. New Zealand has its GDT auction coming up, so a pickup in dairy prices might bring some upside for the Kiwi.

So far, risk-off flows have picked up earlier in the week due to a stronger than expected US ISM manufacturing PMI spurring reduced Fed easing bets. The report reflected a pickup in production and prices, suggesting that the Fed might decide to pare eits number of interest rate cuts for the year.

Later on, the US ISM services PMI is up for release and might also have a similar impact on sentiment, so another drop in risk-taking might mean downside for the higher-yielding Kiwi.