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James Hyerczyk

The New Zealand Dollar finished lower on Friday, pressured by a more optimistic outlook for the U.S. economy. Although traders expect the Fed to cut its benchmark interest rate by 25-basis points in September, the decision is now being thought of as a move to prevent a global recession rather than a U.S. recession, despite an inversion of the 2-year/10-year U.S. Treasury yield spread earlier in the week.

On Friday, the NZD/USD settled at .6425, down 0.0021 or -0.33%.

U.S. economic data played a role in Friday’s price action. U.S. homecoming fell for a third straight month in July amid a steep decline in the construction of multi-family housing units, but a jump in permits to a seven-month high raised hope for the struggling housing market. The Kiwi was also pressured on Thursday following the release of better-than-expected U.S. retail sales data, which drove up demand for the greenback.


Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through .6378 will signal a resumption of the downtrend. A move through .6891 will change the main trend to up. This is highly unlikely, however. The prolonged move down in terms of price and time has put the NZD/USD in the window of time for a closing price reversal bottom.

The minor trend is also down. A trade through .6588 will change the minor trend to up. This will also shift momentum to the upside. A trade through .6378 will reaffirm the minor downtrend.

The minor range is .6588 to .6378. Its 50% level or pivot at .6483 is resistance.

The main range is .6791 to .6378. Its retracement zone at .6585 to .6633 is controlling the near-term direction of the NZD/USD. It is also a resistance area.


Daily Swing Chart Technical Forecast

Based on last week’s price action and the close at .6425, the direction of the NZD/USD on Monday is likely to be determined by trader reaction to the pivot at .6483.

Bearish Scenario

A sustained move under .6483 will indicate the presence of sellers. If this creates enough downside momentum then look for the selling to possibly extend into the two-week low at .6378, followed closely by the January 20, 2016 main bottom at .6346.

The main bottom at .6346 is a potential trigger point for an acceleration to the downside with the August 24, 2015 main bottom at .6207 the next likely downside target.

Bullish Scenario

A sustained move over .6483 will signal the presence of buyers. If this move generates enough upside momentum then look for a possible extension of the rally over the near-term into the main 50% level at .6585, followed closely by the minor top at .6588.

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