NZD/USD Forex Technical Analysis – Trader Reaction to Long-Term 50% Level at .6467 Sets the Tone

James Hyerczyk
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The New Zealand Dollar is edging higher early Monday, bolstered by a weaker U.S. Dollar, loosening lockdowns in China and increasing demand for riskier assets. Short-sellers are also squaring positions ahead of this week’s Reserve Bank of New Zealand (RBNZ) monetary policy meeting.

At 04:00 GMT, the NZD/USD is trading .6453, up 0.0043 or +0.68%.

The U.S. Dollar is starting the week lower after posting its first weekly loss in nearly two months, as investors fully-priced a 50-basis point rate hike by the Fed in June.

In China, Shanghai expects to lift its city-wide lockdowns and return to more normal life from June 1. Additionally, an unexpected big rate cut by China’s central bank last week sent a strong signal to traders that authorities are willing to support a recovery.

A technical bounce in U.S. stock index futures overnight is also underpinning the risk-sensitive New Zealand Dollar.

Finally, shorts are covering positions ahead of the release of the RBNZ monetary policy statement, interest rate decision and press conference. Traders are expecting central bankers to lift its benchmark cash rate by 50 basis points on Wednesday.

Daily NZD/USD
Daily NZD/USD

Daily Swing Chart Technical Analysis

The main trend is down, but momentum is trending higher. A trade through .6569 will change the main trend to up. A move through .6217 will signal a resumption of the downtrend.

The minor trend is up. This is controlling the momentum. A trade through .6291 will change the minor trend to down.

On the downside, support is a pair of 50% levels at .6393 and .6342.

On the upside, the first resistance is a long-term 50% level at .6467. Overcoming this level could lead to a test of another 50% level at .6560, followed by the main retracement zone at .6626 to .6722.

Daily Swing Chart Technical Forecast

Trader reaction to the long-term 50% level at .6467 will likely determine the direction of the NZD/USD into the close on Monday.

Bullish Scenario

A sustained move over .6467 will indicate the short-covering is getting stronger. This could trigger an acceleration into the resistance cluster at .6560 – .6569.

Taking out .6569 will change the main trend to up and could create the upside momentum to reach the main objective of this rally at .6626 to .6722.

Bearish Scenario

A sustained move under .6467 will signal the presence of sellers. This could create the downside momentum needed to trigger a pullback into .6393, followed by .6342.

For a look at all of today’s economic events, check out our economic calendar.

This article was originally posted on FX Empire

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