NZD/USD Forex Technical Analysis – RBNZ, Fed Policy Divergence Could Fuel Near-Term Spike to .5991

The New Zealand Dollar is edging higher on Thursday after changing the trend to up the previous session as investors bet on a softer-tone from the Federal Reserve on future interest rate hikes at next week’s policy meeting.

Traders are also wagering on more aggressive rate hikes from the Reserve Bank (RBNZ) later in November after a report showed New Zealand inflation expectations jumped back above 6% in October after consumer prices rose much faster than expected in the third quarter.

At 01:06 GMT, the NZD/USD is trading .5841, up 0.0003 or +0.06%.

ANZ New Zealand senior economist Miles Workman said earlier in the week, “Economists are out there warning that interest rates are going to keep going higher – and house prices likely lower – until the New Zealand economy goes into recession or something close to it.

Looking Ahead…

There were no economic releases out of New Zealand overnight, but in the U.S. on Thursday, traders will get the opportunity to react to U.S. reports on Advance GDP, Durable Goods and Weekly Unemployment Claims.

The NZD/USD could rally further on Thursday if the US Advance GDP comes in weaker than the 2.3% forecast. This would likely solidify views that the Federal Reserve will slow the pace of its rate hiking cycle starting at its December meeting.

Traders and economists predict a fourth-straight 75 basis point interest rate increase next Wednesday, but there is growing speculation that the central bank will slow to half a point in December.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The trend changed on Wednesday when buyers took out the last main top at .5814. A trade through .5512 will change the main trend to down.

The minor trend is also up. A trade through the minor bottom at .5600 will change the minor trend to down. This will also shift momentum to the downside.

The NZD/USD is currently testing a key short-term pivot at .5837.

On the upside, the nearest resistance is a 50% level at .5991. On the downside, the nearest support is a minor pivot at .5681.

Daily Swing Chart Technical Forecast

Trader reaction to the short-term pivot at .5837 is likely to determine the direction of the NZD/USD on Thursday.

Bullish Scenario

A sustained move over .5837 will indicate the presence of buyers. This move could trigger an acceleration to the upside over the near-term since there is no resistance until the 50% level at .5991.

Bearish Scenario

A sustained move under .5837 will signal the presence of sellers. If this move generates enough downside momentum then look for the selling to possibly extend into the minor pivot at .5681. This is the last potential support before the .5600 minor bottom.