The New Zealand Dollar continues to drift sideways to lower nearly two week after the Reserve Bank of New Zealand (RBNZ) stunned the financial markets by cutting interest rates a steep 50 basis points and even indicated it may be willing to take rates below zero. The news drove the Kiwi to three-and-a-half year lows.
At 03:56 GMT, the NZD/USD is trading .6411, down 0.0006 or -0.09%.
We could see some movement in the Forex pair later in the session with the release of the Federal Reserve’s minutes from its July 30-31 meeting. The Fed cut rates by 25 basis points last month, citing “global developments” and “muted inflation.” The Fed minutes are scheduled for release Wednesday at 18:00 GMT.
Daily Technical Analysis
The main trend is down according to the daily swing chart. A trade through .6378 will signal a resumption of the downtrend. The main trend will change to up on a move through .6791. This is highly unlikely, however. Before the Forex pair can reach this level, it has to take out a minor top and the short-term retracement zone.
The minor trend is also down. A trade through .6588 will change the minor trend to up. This will also shift momentum to the upside.
The short-term range is .6791 to .6378. Its retracement zone at .6585 to .6633 is the primary upside target.
With the retracement zone so close to the minor top, don’t expect a huge breakout to the upside.
The minor range is .6588 to .6378. Its 50% level or pivot at .6483 is resistance.
Daily Technical Forecast
The sideways to lower chart pattern suggests the direction of the NZD/USD is still being controlled by the bearish traders. As long as fears over a global recession and the U.S.-China trade dispute continue, it’s going to be hard to mount a strong rally. Furthermore, there is the threat of even more aggressive policy moves by the RBNZ.
On the upside, the resistance cluster at .6481 to .6483 is keep a lid on prices. The first level is the former top at .6481. Old bottoms become new tops rule. The second level is the minor pivot.
Overtaking and sustaining a move over .6483 could drive the NZD/USD into the nearest downtrending Gann angle at .6591.
On the downside, the first target is the minor bottom at .6378. This is followed by the January 20, 2016 main bottom at .6346 and a downtrending Gann angle at .6331. Crossing to the weak side of the Gann angle at .6331 will put the NZD/USD in an extremely bearish position with the August 24, 2015 main bottom at .6207 the next major target.
This article was originally posted on FX Empire
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