The New Zealand Dollar plunged to its weakest level since November 25 as investors continued to weigh the impact of the coronavirus on economic growth in China, one of New Zealand’s major trading partners.
Potential fallout from the coronavirus, and the adverse impact it is likely to have on economic growth, is the latest threat to New Zealand’s growth outlook that Reserve Bank policymakers are likely to address when they meet on Wednesday.
On Friday, the NZD/USD settled at .6402, down 0.0057 or -0.88%.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart. The downtrend was reaffirmed on Friday when sellers took out the previous swing bottom at .6450. The Forex pair closed in a positon to take out the November 25 main bottom at .6395. This is a potential trigger point for an acceleration into the November 8 bottom at .6322. Taking out .6503 will change the main trend to up.
The first main range is .6204 to .6758. Closing on the weak side of this zone at .6416 to .6481 makes it resistance.
The second main range is .6791 to .6204. Its retracement zone at .6498 to .6567 is another major resistance area.
Daily Swing Chart Technical Forecast
Based on Friday’s price action and the close at .6402, the direction of the NZD/USD on Monday is likely to be determined by trader reaction to the major Fibonacci level at .6416.
A sustained move under .6416 will indicate the presence of sellers. Taking out the main bottom at .6395 could trigger an acceleration to the downside with .6322 the next downside target.
A sustained move over .6416 will signal the presence of buyers. If this move can create enough upside momentum then look for the rally to possibly extend into a pair of 50% levels at .6481 and .6498. This are the last two potential resistance levels before the .6503 main top.
We could see a choppy two-sided trade early in the week until the Reserve Bank of New Zealand (RBNZ) makes its interest rate and monetary policy decisions on Wednesday.
As of Friday’s close, the RBNZ is expected to hold rates steady, but it could soften the tone of its policy statement to reflect the headwinds out of China and Australia.
This article was originally posted on FX Empire
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