• NZDUSD exhibits strongest day in three months, backs double bottom formation

• Technical signals are on the bullish side; crucial resistance seen near 0.6065

NZDUSD rose exponentially by more than 1.0% on Wednesday, becoming one of the best performing major pairs today as stronger-than-expected NZ jobs data trimmed expectations of a 25bps rate cut next week, and safe-haven flows eased.

The pair advanced forcefully above the broken support trendline from October 2022 and its 20-day simple moving average (SMA) after creating a bullish double bottom pattern near 0.5850.

The risk remains skewed to the upside as the RSI is set to cross above its 50 neutral mark and the MACD is progressing above its red signal line.

Yet, with the stochastic oscillator hanging near its 80 overbought level, additional upside movements might prove short-lived, especially if the 50% Fibonacci retracement of the October-February 2023 uptrend ceases the current bullish action near 0.6024. The tentative resistance trendline from June’s high at 0.6065 and the 200-day simple moving average (SMA) at 0.6082 could be a tougher obstacle. If the pair jumps over that border, it could quickly climb towards the 38.2% Fibonacci of 0.6145 and the resistance trendline from February 2021 at 0.6173.

Alternatively, a drop below the 0.5965 threshold could see a continuation towards the 61.8% Fibonacci of 0.5900. If the bears claim the latter, they will head straight for the double bottom area of 0.5850, a break of which could cause a freefall towards the 2023 low of 0.5772 or lower to the 78.6% Fibonacci of 0.5730.

Overall, NZDUSD switched back to bullish mode in the short-term picture. While buying appetite could stay in play, a bigger challenge could emerge near 0.6065-0.6082.