NZDUSD saw its fortunes improve in the short term after closing sharply above the 20-day simple moving average (SMA) on Tuesday, with the focus now on the resistance at 0.6256.

Encouragingly, price gained further momentum today to climb above the descending trendline from the 0.7032 high. Technical oscillators also reflect increase buying appetite as the RSI strengthens its positive momentum above its neutral 50 mark and the MACD pulls away above its red signal line.

If buyers keep strength above the descending trend line and the 0.6256 bar, which is the 38.2% Fibonacci retracement of the last down leg, the next hurdle could appear around the 50-day simple moving average (SMA) and the 50% Fibonacci of 0.6317. Higher, the recovery could accelerate towards the 0.6400 round level and the 61.8% Fibonacci, while a sustained move beyond the 78.6% Fibonacci of 0.6564 and the 0.6500 mark could jeopardize the downward trajectory near the June high of 0.6567.

On the downside, a quick reference for support could be the 20-day SMA and the 23.6% Fibonacci from 0.6181, where the Tenkan-sen binding red line also converges. If this zone cannot cushion the selling trends, all eyes will be on the 0.6059 2-year low. Even lower, the price could test the psychological number of 0.6000 before the key low of 0.5916 from April to May 2020.

In short, NZDUSD is likely to extend its near-term rally if resistance at 0.6256 breaks. The next hurdle may appear around the 50-day SMA at 0.6317.