NZD/USD Bulls Eyeing .6684 for Change in Trend

The New Zealand Dollar is trading higher for a third straight session on Wednesday, putting it in a positon to change the main trend to up for the first time since January 21. Bullish traders are pricing in the risk of aggressive tightening by central banks, driving local government bond yields to three-year peaks and making the Kiwi a more attractive investment.

At 09:17 GMT, the NZD/USD is trading .6655, up 0.0008 or +0.11%.

New Zealand 10-year yields jumped 14 basis points on Tuesday along to hit 2.74%, levels last visited in late 2018.

Meanwhile, the closely-watched three-year swap rate climbed nine basis points to 2.51% as investors wagered the Reserve Bank of New Zealand (RBNZ) might hike by 50 basis points at its meeting on February 23.

Cash rates are seen up at 2.50% by year end, heights last reached in early 2016.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through .6684 will change the main trend to up. This will make .6590 a new main bottom and change in trend point.

On the downside, the minor support is a 50% level at .6637. This is followed by a minor retracement zone at .6606 to .6588.

On the upside, the first target is a 50% level at .6670. Changing the main trend to up could trigger a further rally into a retracement zone at .6710 to .6753.

Daily Swing Chart Technical Forecast

The direction of the NZD/USD on Wednesday is likely to be determined by trader reaction to .6637.

Bullish Scenario

A sustained move over .6637 will indicate the presence of buyers. The first upside target is .6670, followed by .6684.

Taking out .6684 will change the main trend to up. If this creates enough upside momentum then look for a surge into the short-term 50% level at .6710. Sellers could come in on the first test of this level. Overcoming it, however, could extend the move into the Fibonacci level at .6753.

Bearish Scenario

A sustained move under .6637 will signal the presence of sellers. This could trigger a break into a minor retracement zone at .6606 to .6588.

The minor Fibonacci level at .6588 is a potential trigger point for an acceleration into .6529.