NZD/USD Forex Technical Analysis – Negative Sentiment Continues to Weigh on Kiwi

The New Zealand Dollar is trading nearly flat after testing its lowest level since March 2020 earlier in the session. The Kiwi is being pressured by a number of events including an aggressive Federal Reserve, the threat of a global recession and sliding risk sentiment due to ominous developments in the war between Russia and Ukraine.

At 07:41 GMT, the NZD/USD is trading .5742, down 0.0003 or -0.04%.

With the Federal Reserve and a host of other major central banks tightening policy last week, the specter of a global recession looms ever closer. This has unnerved investors who are flocking to the safety of the U.S. dollar.

Furthermore, since inflation is lower in New Zealand than the United States, the Reserve Bank of New Zealand (RBNZ) is not likely to raise rates at the same pace as the U.S. Federal Reserve. This is making the U.S. Dollar a more attractive investment.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through the intraday low at .5694 will signal a resumption of the downtrend. The main trend will change to up on a move through .6162. This is highly unlikely. However, due to the prolonged move down in terms of price and time, the market is ripe for a closing price reversal bottom.

The minor trend is also down. A trade through .6002 will change the minor trend to up. This will shift momentum to the upside.

The nearest resistance is a pair of 50% levels at .5860 and .5928.

Daily Swing Chart Technical Forecast

Trader reaction to .5745 is likely to determine the direction of the NZD/USD on Monday.

Bearish Scenario

A sustained move under .5745 will indicate the presence of sellers. Taking out the intraday low at .5694 will indicate the selling pressure is getting stronger. If this generates enough downside momentum then look for the selling to possibly extend into the March 19, 2020 main bottom at .5469 over the near-term.

Bullish Scenario

A sustained move over .5745 will signal the presence of counter-trend buyers. If this creates enough upside momentum, the Kiwi could rally into the first pivot at .5860.

Side Notes

A close over .5745 will form a potentially bullish closing price reversal bottom. This won’t change the main trend to up, but if confirmed, this could trigger the start of a 2 to 3 day counter-trend rally.