NZD/USD Forex Technical Analysis – Bullish GDP Report Could Fuel Surge into .7282 to .7325

The New Zealand Dollar is trading flat early Thursday as traders await the release of the latest report on quarterly Gross Domestic Product at 21:45 GMT. The report is expected to show the economy grew 0.2%. This number represents a dramatic drop from the previously reported 14.0% gain.

At 24:19 GMT, the NZD/USD is trading .7240, up 0.0001 or +0.01%.

Late Wednesday, the NZD/USD surged after the Federal Reserve said it does not expect to raise interest rates through all of 2023, contrary to market expectations.

In a statement after the Fed held interest rates steady, the U.S. central bank said it expects a rapid jump in U.S. economic growth and inflation this year as the COVID-19 crisis winds down, and vowed to keep its target interest rate near zero for years to come.

Traders interpreted the report as bearish, sending yields and the U.S. Dollar sharply lower, while making the New Zealand Dollar a more attractive asset.

I don’t expect to see much of a reaction to the GDP data. There could be some volatility, but nothing long lasting. However, the Kiwi is likely to continue to be supported if U.S. Treasury yields remain under pressure over the short-run.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart, however, momentum shifted to the upside on Wednesday. A trade through .7099 will signal a resumption of the downtrend. The main trend will change to up when buyers take out the last swing top at .7465.

The minor trend is up. This is controlling the momentum. The trend changed to up when buyers took out .7241. The new minor bottom is .7151.

The NZD/USD closed on the strong side of the main retracement zone at .7234 to .7179. This is helping to give it an upside bias. This zone is potential support.

The short-term range is .7465 to .7099. Its retracement zone at .7282 to .7325 is the next likely upside target. Since the main trend is down, sellers could come in on the first test of this area.

Daily Swing Chart Technical Forecast

The direction of the NZD/USD on Thursday is likely to be determined by trader reaction to .7234.

Bullish Scenario

A sustained move over .7234 will indicate the presence of buyers. This could trigger a surge into .7282. Look for sellers on the first test. Overcoming this level could drive the Kiwi into .7325. This is another potential resistance level and potential trigger point for an acceleration to the upside.

Bearish Scenario

A sustained move under .7234 will signal the presence of sellers. This could trigger a sharp break into the next support level at .7179.

Side Notes

We could find out today if Wednesday’s rally was short-covering or real buying.