NZD/USD Forex Technical Analysis – Higher as Speculators Bet on More Aggressive RBNZ Rate Hikes

The New Zealand Dollar is trading higher for a fourth straight session against its U.S. counter-part early Wednesday after financial futures traders narrowed the odds of more aggressive rate hikes ahead as central banks globally rushed to catch up with inflation.

The Kiwi is also benefiting from a weaker U.S. Dollar, which pulled back from a recent high after a Reuters report said the European Central Bank (ECB) was considering raising interest rates by an outsized 50 basis points at its policy meeting on Thursday.

At 05:44 GMT, the NZD/USD is at .6258, up 0.0033 or +0.52%.

Kiwi bulls are also being driven by speculation that the Reserve Bank of Australia (RBA) might step up the pace of tightening by hiking its benchmark by 75 basis point at its policy meeting in August.

This move is likely to encourage the Reserve Bank of New Zealand (RBNZ) to step up its efforts to curb red hot inflation with a 75 basis point rate hike of its own.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. However, momentum is trending higher. A trade through .6396 will change the main trend to up. A move through .6061 will signal a resumption of the downtrend.

The minor trend is up. It changed to up earlier today when buyers took out .6252. This also shifted momentum to the upside. A trade through .6141 will change the minor trend to down.

The NZD/USD is trading on the strong side of its long-term Fibonacci level at .6231, making it support. Additional support is a minor pivot at .6166.

On the upside, the nearest target is a 50% level at .6319. This is the last potential resistance before the .6396 main top.

Daily Swing Chart Technical Forecast

Trader reaction to the long-term Fibonacci level at .6231 is likely to determine the direction of the NZD/USD early Wednesday.

Bullish Scenario

A sustained move over .6231 will indicate the presence of buyers. If this move creates enough upside momentum then look for a surge into the short-term pivot at .6319. Since the main trend is down, sellers could come in on the first test of this level.

Overtaking .6319 will indicate the buying is getting stronger. This could trigger an acceleration into the main top at .6396.

Bearish Scenario

A sustained move under .6231 will signal the presence of sellers. This could trigger a break into the minor pivot at .6166. Aggressive counter-trend buyers could come in on the first test of this level. They are going to try to form a potentially bullish secondary higher bottom. If this level fails to hold then look for the selling to possibly extend into the minor bottom at .6141.