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James Hyerczyk

The New Zealand Dollar fell more than 0.7% against the U.S. Dollar to a one-week low as the greenback extended last week rebound on Monday. Investors are booking profits after a more than two month rally in reaction to sharp gains in U.S. Treasury yields and hopes for more stimulus to boost the world’s largest economy.

At 05:45 GMT, the NZD/USD is trading .7188, down 0.0050 or -0.69%.

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Last week, the yield on the benchmark 10-year Treasury note and 30-year Treasury bond rose to their highest levels not seen since March 2020.

In addition to the rising yields, Kiwi traders will also be focused on the prospect of more fiscal stimulus, as the January 20 inauguration of President-elect Joe Biden gets closer. Yields are moving higher as investors bet the new Democratic majority in Congress will move quickly and that it could consider a package of $1 trillion or more.

With Democrats now in control of the Senate and House, the incoming administration of President-elect Joe Biden is expected to deliver an even bigger stimulus package than had been expected with a divided Congress. Biden said Friday the total will be in “the trillions of dollars.”


Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through .7153 will change the main trend to down. A move through .7316 will signal a resumption of the uptrend.

The minor range is .7153 to .7316. Its 50% level at .7235 is resistance.

The short-term range is .7003 to .7316. Its 50% level at .7159 is the next potential downside target.

The main range is .6589 to .7316. If the main trend changes to down then its retracement zone at .6952 to .6867 will become the primary downside target.


Daily Swing Chart Technical Forecast

The direction of the NZD/USD on Monday will be determined by trader reaction to the 50% level at .7235. The Forex pair is currently trading on the weak side of this level so there is an early downside bias.

Bearish Scenario

A sustained move under .7235 will indicate the presence of sellers. The first two downside targets are the 50% level at .7159 and the main bottom at .7153.

Taking out .7153 will change the main trend to down. The daily chart indicates there is plenty of room to the downside so we could see an acceleration to the downside with the next major targets .7003 and .6952.

Bullish Scenario

A sustained move over .7235 will indicate the presence of buyers. This could lead to a retest of the main top at .7316. Taking out this level could trigger an acceleration into the April 13, 2018 main top at .7395.

Side Notes

Three days down from the main top overbalanced time. This is a sign of developing weakness.

For a look at all of today’s economic events, check out our economic calendar.

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