NZD/USD Forex Technical Analysis – Firm after China’s Decision to Ease COVID Travel Restrictions

The New Zealand Dollar is edging higher on Tuesday as risk appetite rose after China took a major step towards easing curbs on its borders. The Kiwi is advancing in mostly thin trading amid the year-end holiday season after the Chinese government announced it will scrap its COVID quarantine rule for inbound travelers. The move to ease travel restrictions represents another step towards opening up the economy.

New Zealand is a major trading partner with China and is often treated as a liquid proxy for China’s Yuan. So potentially good news for China’s economy is often potentially favorable news for the New Zealand Dollar.

At 03:45 GMT, the NZD/USD is trading .6283, down 0.0003 or -0.05%.

Reuters is reporting that China will stop requiring inbound travelers to go into quarantine on arrival starting Jan. 8, the National Health Commission said on Monday, even as COVID cases spike. At the same time, Beijing downgraded the regulations for managing COVID cases to the less strict Category B from the top-level Category A.

The move is essentially a precursor to a full reopening of the economy, which is good for the global economy and commodity-linked currencies like the New Zealand Dollar.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, but, momentum is trending lower. A trade through .6514 will signal a resumption of the uptrend. A move through .6156 will change the main trend to down.

The minor trend is down. This is controlling the momentum.

The nearest support is a long-term Fibonacci level at .6231, followed by a short-term 50% level at .6177.

The nearest resistance is a minor pivot at .6373, followed by a long-term 50% level at .6467.

Daily Swing Chart Technical Forecast

Trader reaction to .6273 is likely to determine the direction of the NZD/USD on Tuesday.

Bullish Scenario

A sustained move over .6273 will indicate the presence of buyers. Look for a surge into the minor pivot at .6373 if this creates enough upside momentum.

Bearish Scenario

A sustained move under .6273 will signal the presence of sellers. This could trigger a break into the support cluster at .6231, followed by a short-term 50% level at .6177, followed by the main bottom at .6156. A trade through this level will change the main trend to down.