The New Zealand Dollar is trading lower on Friday, but bouncing from its low. The catalyst behind today’s early selling pressure is weak domestic data that raised the odds of another Reserve Bank of New Zealand (RBNZ) rate cut.
The New Zealand BusinessNZ Manufacturing PMI dropped to 50.2 in May, down from 52.7, its lowest reading since December 2012. Business NZ’s executive director for manufacturing Catherine Beard said that the drop in activity to its lowest point in over six years was obviously a concern, especially when the sub-index values are examined.
At 07:12 GMT, the NZD/USD is trading .6543, down 0.0022 or -0.35%.
Daily Technical Analysis
The main trend is up according to the daily swing chart. A trade through .6495 will change the main trend to down. This could trigger a further break into the next main bottom at .6481. This is the last main bottom before the October 16, 2018 main bottom at .6465.
The uptrend will resume on a trade through .6682, but this is highly unlikely today.
The short-term range is .6481 to .6682. Its retracement zone at .6582 to .6558 is controlling the near-term direction of the Forex pair. Trading below this zone is helping to give the NZD/USD a downside bias. This zone should be considered resistance.
Daily Technical Forecast
Momentum is trending lower today, but the NZD/USD is trading between support and resistance.
On the upside, the resistance is a Fibonacci level at .6558 and an uptrending Gann angle at .6561. Overtaking these levels could drive the Forex pair into a resistance cluster at .6582.
On the downside, the nearest target is an uptrending Gann angle at .6521. This is the last potential support angle before the main bottoms at .6495 and .6481.
Later today at 12:30 GMT, traders will get the opportunity to react to the U.S. Retail Sales report. Core Retail Sales are expected to come in at 0.5%. Retail Sales are estimated to have risen 0.7%. Weak data will solidify a Fed rate cut in July. This may offset some of the weakness from RBNZ rate cut expectations.
This article was originally posted on FX Empire
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