NZD/USD Forex Technical Analysis – Lower Despite Slightly Better Stocks, Weak US Economic Data

The New Zealand Dollar is posting an inside move against the U.S. Dollar in late afternoon trading on Friday as it consolidates some of Thursday’s volatile counter-trend rally. The price action suggests the previous session’s move was fueled by short-covering. Additionally, there was nothing in the news to trigger the start of a change in trend.

At 19:10 GMT, the NZD/USD is trading .6311, down 0.0052 or -0.81%.

On Thursday, the Kiwi rallied because the previous day, the Federal Reserve delivered as promised. Traders had priced in a 75 basis point (bp) rate hike by the Fed and that’s what policymakers gave them.

On Friday, the greenback was supported by somewhat hawkish comments from Federal Reserve Chair Jerome Powell.

Powell that reiterated the central bank’s commitment to price stability. Powell also said the Fed’s rate hikes have been contributing to the confidence in the currency.

The Chairman also added the central bank is acutely focused on returning inflation to its 2% mandate. This translates into more aggressive rate hike by the Fed, which is potentially bullish for the U.S. Dollar.

Traders of the risk sensitive New Zealand Dollar are shrugging off a small gain in U.S. equity markets as well as weaker than expected U.S. economic data including industrial production and the Conference Board’s U.S. Economic Indicators report.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through .6196 will signal a resumption of the downtrend. A move through .6576 will change the main trend to up.

The key support is a long-term Fibonacci level at .6231. The major upside target and key resistance is the long-term 50% level at .6467.

The minor range is .6576 to .6196. Its pivot at .6386 is resistance. It stopped the buying at .6396 on Thursday.

Daily Swing Chart Technical Forecast

Trader reaction to .6296 is likely to determine the direction of the NZD/USD into the close on Friday.

Bullish Scenario

A sustained move over .6296 will indicate the presence of buyers. If this move creates enough upside momentum, we could see a late session surge into the minor pivot at .6386.

Bearish Scenario

A sustained move under .6296 will signal the presence of sellers. If this generates enough downside momentum then look for the selling to possibly extend into .6231.