NZDUSD has formed higher highs and higher lows inside a rising channel on its 4-hour chart, and price is in the middle of a pullback. The mid-channel area of interest appears to be holding, but a larger pullback could test the channel bottom.

The 100 SMA appears to be crossing above the 200 SMA to confirm that the path of least resistance is to the upside or that support levels are more likely to hold than to break. Price is trading above the moving averages, so these could hold as dynamic support on dips.

Stochastic is heading lower and has some room to head lower before indicating oversold conditions or exhaustion among sellers. This could keep the pullback going until the bottom of the channel at the .7150 minor psychological mark. RSI has more room to head south before reaching the oversold area, so sellers could stay in control for a bit longer.

Turning higher could confirm that buyers are returning and might take NZDUSD back to the resistance levels at the middle of the channel or the very top close to .7300.

There are no major reports due from the US or New Zealand in the next couple of days, so it could be all about market sentiment from here. Traders might be keen on booking profits ahead of the Chinese New Year holidays, though, so volatility might pick up.

So far it looks like risk appetite remains in play as traders are generally optimistic about the vaccine rollout and US government stimulus. This could keep higher-yielding currencies like the Kiwi supported against the US dollar, although the prospect of stronger inflation and possibly Fed rate hikes could prove more bullish for the latter.