NZD/USD Forex Technical Analysis – Strengthens Over .6924, Weakens Under .6921
The New Zealand Dollar is inching higher early Thursday after closing lower the previous session in a volatile trade. The currency was under pressure on Wednesday despite a rate hike by the Reserve Bank (RBNZ).
In a widely telegraphed move, the RBNZ hiked interest rates on Wednesday for the first time in seven years and signaled further tightening to come, as it looks to get on top of inflationary pressures and cool a red-hot housing market.
At 03:17 GMT, the NZD/USD is trading .6916, up 0.0001 or +0.02%.
The increase in the cash rate to 0.50% by the RBNZ had been forecast by all 20 economists polled by Reuters and priced into the market for weeks, which is one reason for the weakness in the Kiwi. The other reasons include higher U.S. Treasury yields, a stronger U.S. Dollar and uncertainty ahead of Friday’s U.S. Non-Farm Payrolls report.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart. A trade through .6860 will signal a resumption of the downtrend. A move through .7157 will change the main trend to up.
The minor trend is also down. A trade through .6982 will change the minor trend to up. This will shift momentum to the upside.
On Wednesday, the NZD/USD closed on the weak side of a major Fibonacci level at .6924, making it resistance. The next resistance is the 50% level at .6988.
The minor range is .6860 to .6982. Its 50% level at .6921 is potential support.
Daily Swing Chart Technical Forecast
The direction of the NZD/USD on Thursday is likely to be determined by trader reaction to .6924 and .6921,
Bullish Scenario
A sustained move over .6924 will indicate the presence of buyers. The first upside target is a minor pivot at .6930. Overcoming this level will indicate the buying is getting stronger with potential targets at .6982 and .6988.
Bearish Scenario
A sustained move under .6921 will signal the presence of sellers. The first downside target is .6877. If this fails then look for the selling to possibly extend into .6860. This is the last potential support before the August 20 main bottom at .6860.
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This article was originally posted on FX Empire
