NZD/USD Forex Technical Analysis – Early Gains Driven by Weaker US Dollar

The New Zealand Dollar is pushing higher early Monday as traders respond to a weaker U.S. Dollar while attempting to extend its weekly uptrend. Thin trading conditions due to the start of China’s week-long Lunar New Year holiday may be contributing to the move as well as the announcement of a new prime minister.

At 02:12 GMT, the NZD/USD is trading .6490, up 0.0018 or +0.28%.

Downbeat U.S. economic data as well as easing inflation is supporting the market’s case for a relatively small 25-basis point rate hike by the Fed on Feb. 1 with bullish traders absorbing last week’s hawkish remarks by a number of Fed officials. A slower rate hike pace should weigh on the greenback.

Despite the early gains, the NZD/USD could face headwinds later in the week with the release of fourth quarter consumer price inflation data early Wednesday.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through .6530 will signal a resumption of the uptrend. A move through .6191 will change the main trend to down.

The minor trend is also up. A trade through .6366 will change the minor trend to down. This will shift momentum to the downside.

The NZD/USD is currently trading on the strong side of a long-term 50% level at .6467, making is support. The nearest resistance is the June 3, 2022 main top at .6576.

Daily Swing Chart Technical Forecast

Trader reaction to the long-term 50% level at .6467 is likely to determine the direction of the NZD/USD on Monday.

Bullish Scenario

A sustained move over .6467 will indicate the presence of buyers. If this generates enough upside momentum then look for a surge into the minor top at .6530. Overtaking this level will indicate the buying is getting stronger with the main top at .6576 the next likely target.

Bearish Scenario

A sustained move under .6467 will signal the presence of sellers. The first downside target is a minor pivot at .6433. If this fails then look for the selling to possibly extend into the support cluster at .6366 – .6360.