NZD/USD Forex Technical Analysis – In Position to Test Key Retracement Zone at .6207 to .6172
The New Zealand Dollar lost ground on Friday as an unexpectedly strong U.S. jobs report eased recession worries and dashed speculation that the Federal Reserve would pivot away from its aggressive monetary policy tightening.
On Friday, the NZD/USD settled at .6243, down 0.0049 or -0.78%.
The Kiwi had recently rallied on the thought the Reserve Bank of New Zealand (RBNZ) would continue to raise interest rates while the Fed would shift from hawkish to dovish. However, the jobs data shows the U.S. economy is strong, and this gives the Fed more room to be aggressive, which makes the U.S. Dollar a more attractive investment than the New Zealand Dollar.
According to a U.S. government report released on Friday, U.S. employers hired far more workers than expected in July, causing the unemployment rate to fall to a pre-pandemic low of 3.5% and average hourly earnings to rise sharply.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart. A trade through .6353 will change the main trend to up. A move through the nearest main bottom at .6061 will signal a resumption of the downtrend.
The minor trend is also down. A trade through .6315 will change the minor trend to up. This will shift momentum to the upside.
On the downside, the best support is the long-term Fibonacci level at .6231, followed by the minor retracement zone at .6207 to .6172.
On the upside, the bets resistance is the short-term retracement zone at .6319 to .6379. This zone stopped the buying at .6353 on August 1.
The direction of the NZD/USD early Monday is likely to be determined by trader reaction to the long-term Fibonacci level at .7231.
A sustained move over .6232 will indicate the presence of buyers. If this move creates enough upside momentum, we could see a test of the resistance cluster at .6315 to .6319.
A sustained move under .6232 will signal the presence of sellers. This could lead to a labored break with potential support targets a minor 50% level at .6207, a pair of minor bottoms at .6192 and .6185 and a minor 61.8% level at .6172.
Aggressive counter-trend buyers are going to try to form a potentially bullish secondary higher bottom at .6207 to .6172, however, if sellers take out this zone, we could see the start of an acceleration to the downside. The daily chart indicates there is plenty of room to slide with .6061 the nearest major support.