The New Zealand Dollar continued to grind higher on Tuesday, but the buying stopped just short of the July 19 target at .6791. Sellers came in late, but not with enough force to turn the Forex pair lower for the session.
Prices continued to be driven higher by the sell-off in the U.S. Dollar, which lost its appeal as a safe-haven asset when the U.S. and China agreed to Phase 1 of its trade deal on December 13. The Kiwi is also being driven higher by expectations of increased infrastructure spending and a drop in expectations for a near-term rate cut by the Reserve Bank of Australia.
On Tuesday, the NZD/USD settled at .6732, up 0.0004 or +0.06%.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart. It was reaffirmed on Tuesday when buyers took out the previous day’s high. A move through .6756 will signal a resumption of the uptrend.
The main trend will change to down on a move through .6554. This is highly unlikely, but we could see a closing price reversal top, or a near-term 50% to 61.8% retracement. These moves won’t necessarily be trend changing events, but designed to alleviate some of the upside pressure.
The current short-term range is .6554 to .6756. Its 50% level at .6655 is the first downside target.
The price action in the NZD/USD is expected to be a lot different once the major players return and volume reaches average or above average levels. I don’t think the major banks and institutions will be willing to chase the Forex pair higher especially since much of the short-term rally has taken place under extremely light trading conditions.
Traders are going to start paying closer attention to economic data and interest rate differentials rather than just the optimistic headlines about potential economic growth due to the U.S.-China trade deal.
This article was originally posted on FX Empire
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