NZD/USD Forex Technical Analysis – Gains Capped by RBNZ Rate Hike Expectations

The New Zealand Dollar is trading flat on Monday ahead of Wednesday’s Federal Reserve interest rate decision. The Fed is widely expected to deliver a 25 basis point rate hike,

Earlier in the session, New Zealand posted a monthly trade deficit of NZ$475.00 million in December, data from Statistics New Zealand showed on Monday, while the annual deficit was NZ$14.46 billion. Exports totaled NZ$6.72 billion for the month while imports were NZ$7.19 billion.

At 05:33 GMT, the NZD/USD is trading .6495, up 0.0002 or +0.04%.

Although the NZD/USD settled higher last week, the chances of 75 basis point rate hike by Reserve Bank of New Zealand (RBNZ) in February faded after inflation came in softer than expected.

Futures now heavily favor a half-point hike to 4.75%, rather than a move of 75 basis points, and have lowered the likely top for rates to 5.25% form 5.5%.

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 move through .6449 will change the minor trend to down. This will also shift momentum to the downside.

The NZD/USD is trading on the strong side of a long-term Fibonacci level at .6467, making it support. The minor range is .6366 to .6524. Its 50% level at .6445 is potential support.

The short-term range is .6191 to .6530. Its 50% level at .6360 is additional support.

On the upside, the next major resistance is the June 3 main top at .6576.

Daily Swing Chart Technical Forecast

Trader reaction to .6468 is likely to determine the direction of the NZD/USD on Monday.

Bullish Scenario

A sustained move over .6468 will indicate the presence of buyers. If this creates enough upside momentum then look for a surge into the pair of minor tops at .6524 and .6530. The latter is a potential trigger point for an acceleration into .6576.

Bearish Scenario

A sustained move under .6468 will signal the presence of sellers. This could lead to a labored break with potential support a long-term 50% level at .6467 and a support cluster at .6449 – .6445. The latter is a potential trigger point for an acceleration to the downside with the price cluster at .6366 – .6360 the next likely target area.