NZD/USD Forex Technical Analysis – Big Decision for Bullish Traders on Test of .6985 to .6960

The New Zealand Dollar eased slightly against a broadly stronger greenback on Monday, as lower commodity prices and continued lockdowns hurt sentiment.

The Kiwi was also pressured by a rise in U.S. Treasury yields despite strong job openings data in the U.S. and ahead of inflation reading due to be released later this week.

At 20:32 GMT, the NZD/USD is trading .6992, down 0.0019 or -0.28%.

Traders continued to pressure the NZD/USD in reaction to Friday’s U.S. Non-Farm Payrolls report that may have moved the Fed closer to starting the tapering of its bond buying program.

The report showed 943,000 jobs were added in July, well above the 845,000 forecast by economists. Meanwhile, the unemployment rate fell to 5.4%, below an expected rate of 5.7%.

Employment data is one of the key economic indicators being used by the Federal Reserve to determine when it will start tightening monetary policy, along with inflation readings.

The consumer price index (CPI) and the producer price index (PPI), both of which measure inflation, are scheduled to come out Wednesday and Thursday, respectively.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through .7089 will signal a resumption of the uptrend. A trade through will change the main trend to down.

The main range is .7316 to .6881. Its retracement zone at .7099 to .7150 is resistance. This zone is also controlling the near-term direction of the NZD/USD.

On the downside, the NZD/USD is currently trading inside a longer-term retracement zone at .7027 to .6924.

The short-term range is .6881 to .7089. Its retracement zone at .6985 to .6960 is potential support. The upper level of this zone was tested on Monday.

Daily Swing Chart Technical Forecast

The direction of the NZD/USD early Tuesday is likely to be determined by trader reaction to .6985.

Bullish Scenario

A sustained move over .6985 will indicate the presence of buyers. The first upside target is .7027. Taking out this level could trigger an acceleration to the upside with .7089 to .7099 the next potential upside targets.

Bearish Scenario

A sustained move under .6985 will signal the presence of sellers. This could lead to a labored break with potential support targets lined up at .6960 and .6924. Since the main trend is up, buyers looking for value could step in on a test of these levels.

If .6924 fails as support, the next targets become .6902 and .6881. Both are main bottoms so taking them out will change the main trend to down.