NZD/USD Forex Technical Analysis – Reaction to .6785 Sets the Tone with .6771 – .6755 Next Target Area

The New Zealand Dollar is under pressure early Wednesday as the spread of coronavirus cases led to more restrictions globally and clouded the economic outlook, offsetting the rise in demand for riskier assets. With the domestic economic calendar blank, Omicron headlines dominated the news and they were not exactly reassuring for Kiwi traders.

At 08:08 GMT, the NZD/USD is trading .6801, down 0.0004 or -0.06%.

The Kiwi also lost ground to the greenback on speculation that rising inflation would encourage the U.S. Federal Reserve to make its first interest rate hike in March 2022. Currently, the financial futures markets have priced in a June date for the first hike.

The Reserve Bank of New Zealand (RBNZ) has already hiked twice to 0.75% and is widely expected to move to 1.0% at its February 23 policy meeting. Another four hikes are then tipped by October next year. Earlier in December, the Fed said it would raise rates as many as three times in 2022.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through .6841 will reaffirm the uptrend, while a move through .6702 will change the main trend to down.

The short-term range is .6868 to .6702. Its 50% level or pivot at .6785 is support.

The minor range is .6702 to .6841. Its retracement zone at .6771 to .6755 is additional support. Since the main trend is up, buyers could show up on a test of this area. They will be trying to form a secondary higher bottom.

On the upside, the nearest resistance is a 50% level at .6878.

Daily Swing Chart Technical Forecast

The direction of the NZD/USD on Wednesday is likely to be determined by trader reaction to .6785.

Bullish Scenario

A sustained move over .6785 will indicate the presence of buyers. The first upside target is a minor pivot at .6815. Overtaking this level could lead to a test of .6841.

Taking out .6841 could lead to an extension of the rally into .6878.

Bearish Scenario

A sustained move under .6785 will signal the presence of sellers. This could trigger a quick break into .6771 to .6755. Look for buyers on this move.

A trade through .6755 will indicate the selling pressure is getting stronger. This could trigger an acceleration into .6702.

Side Notes

Be careful buying strength and selling weakness. The forecasts calling for accelerations are based on normal to above-average volume and volatility, which we aren’t seeing at this time.