The currency pair rallied in the last hours and touched fresh new highs. NZD/USD increased as much as 100 pips and seems poised to approach and reach new highs in the upcoming period. The Kiwi drags the price higher as the USD is weakened by the USDX’s drop.

Price is trading in the green and has managed to breakout from a Falling Wedge pattern, however, the breakout needs confirmation. USDX is approaching the 92.00 psychological level, where he may find temporary support again.

The dollar index could come to test and retest the 91.64 lowest low, a failure to reach it will signal that the behavior will change again (higher lows).

The New Zealand data have come in mixed today, the ANZ Commodity Prices dropped by 0.8%, while the GDT Price Index rose by 0.3% versus a 0.4% drop in the previous reading period. Unfortunately, the USD is trading in the red as the United States Factory Orders have dropped by 3.3% in July, matching expectations.

NZD/USD has found strong support and now edges higher, but we’ll see what will happen in the upcoming days, a dovish ECB on Thursday will boost the USD, which will dominate the currency market again.

Price has managed to breakout from the Falling Wedge pattern and was almost to reach the 38.2% Fibonacci level. I’ve said in the previous report that the chart pattern will be confirmed if the price will close outside it and if will consolidate a little above the 50% Fibonacci line.

The failure to approach and reach the fifth warning line (wl5) and the WL2 have signaled that the price could climb towards the WL3 again in the upcoming period. Was too oversold to be able to resume the corrective phase.

The Head and Shoulders pattern will be invalidated if the rate will close and will stabilize somewhere near the 0.7230 level. The rebound could be only temporary before the rate will recapture enough bearish energy to be able to resume the downside movement that was started after the false breakout above the 0.7484 level.