NZD/USD Forex Technical Analysis – Remains Bearish Under .6997 – .7039 Retracement Zone

The New Zealand Dollar is trading flat on Wednesday shortly before the release of the Reserve Bank’s (RBNZ) interest rate and monetary policy decisions at 01:00 GMT.

The Kiwi has been under pressure lately even though a rate hike is expected and pricing suggests a 40% chance it is a big one – 50 basis points.

At 0:41 GMT, the NZD/USD is trading .6955, up 0.0005 or +0.07%.

Although traders have already priced in some possibility of a 50 bp hike, the news would nonetheless spike prices higher. However, if the RBNZ comes across as hawkish in its statement with higher forward guidance and a 25 bp rate hike, prices will likely firm with some short-covering seen.

Gains could still be capped because of rising expectations of a faster tapering by the Fed and a sooner-than-expected post-pandemic rate hike.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum has been trending lower since the confirmation of the closing price reversal top on October 21.

A trade through .7219 will negate the closing price reversal top and signal a resumption of the uptrend. A move through .6860 will change the main trend to down.

The minor trend is down. This is controlling the momentum. A trade through .6916 will indicate the selling pressure is getting stronger. A move through .7053 will change the minor trend to up and shift momentum to the upside.

The main range is .6860 to .7219. The NZD/USD is currently trading on the weak side of its retracement zone at .6997 to .7039, making it resistance.

Daily Swing Chart Technical Forecast

The direction of the NZD/USD on Wednesday is likely to be determined by trader reaction to .6950.

Bullish Scenario

A sustained move over .6950 will indicate the presence of buyers. The first upside target is .6981.

Taking out .6981 will indicate the buying is getting stronger. This could extend the rally into .6997 to .7039. Look for sellers on the first test of this area. Overcoming .7039, however, could trigger an acceleration to the upside.

Bearish Scenario

A sustained move under .6950 will signal the presence of sellers. The first downside target is .6916. Taking out this level could trigger an acceleration into a minor bottom at .6877, followed by a main bottom at .6860.