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NZD/USD Forex Technical Analysis – Looking for Another Multi-Year Low This Week

James Hyerczyk

The New Zealand Dollar fell on Friday to nearly a ten-year low as the rate of coronavirus infection about the world escalated. Additionally, economic consequences also rose as more major events were cancelled and travel-related companies downgraded their earnings forecasts.

The downward spiral in the Kiwi escalated after U.S. President Donald Trump on Wednesday banned travel from Europe for 30 days, even as the community-communicated cases within the U.S. escalated. Bearish traders actually feel the rate of infection is much higher since the US is still lacking testing capabilities.

On Friday, the NZD/USD settled at .6067, down 0.0027 or -0.44%.

The New Zealand Dollar fell further on Friday after the Fed made an aggressive move to provide liquidity in the financial markets, boosting Treasury yields and demand for the U.S. Dollar. Furthermore, investors continued to price in the possibility of fresh fiscal stimulus from the U.S. States government.


Daily Technical Analysis

The main trend is down according to the daily swing chart. A trade through .6015 will signal a resumption of the downtrend. A move through .6448 will change the main trend to up.

The short-term range is .6448 to .6015. Its 50% level or pivot at .6232 is resistance. Trading on the weak side of this level is helping to generate the downside momentum.

Short-Term Outlook

On Friday, the market tested a downtrending Gann angle at .6048. Trader reaction to this angle will set the tone on Monday.

A sustained move under this Gann angle will indicate the selling pressure is getting stronger. The first downside target is the multi-year low at .6015. This is followed closely by another downtrending Gann angle at .5989. Crossing to the weak side of this angle will put the NZD/USD in an extremely bearish position.

A sustained move over this angle will signal the presence of buyers. If this move can generate enough upside momentum then we could see another test of the pivot at .6232. Since the main trend is down, sellers are likely to come in on a test of this level.

Side Notes

Rising U.S. Treasury yields should continue to lift demand for the U.S. Dollar. This should lead to an extension of the selling pressure on the New Zealand Dollar.

This article was originally posted on FX Empire