NZD/USD Forex Technical Analysis – Shift in Risk Sentiment Saves Kiwi from Steep Decline

The New Zealand Dollar is trading higher late in the session on Thursday after shrugging off earlier weakness. The Kiwi was pressured early on follow-through selling tied to yesterday’s volatile session which saw the U.S. stock market post its biggest one-day loss in three months.

At 21:20 GMT, the NZD/USD is trading .7185, up 0.0027 or +0.37%. This is up from a low of .7106.

Fueling the rapid turnaround in the currency was a rebound in the U.S. stock market. Equities rebounded from sharp losses in the prior session in a broad rally as earnings season got off to a strong start and fears eased around hedge funds selling long positions to cover shorts.

The move encouraged long U.S. Dollar traders to sell positions in the safe-haven asset as rising sentiment shifted to the riskier commodity-linked New Zealand Dollar.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum is trending lower. A trade through .7096 will change the main trend to down, while a move through .7248 will signal a resumption of the uptrend.

The minor trend is down. This is controlling the momentum.

The short-term range is .7003 to .7316. Its retracement zone at .7159 to .7123 is support. This zone helped stop the selling on Thursday.

The minor range is .7316 to .7096. Its retracement zone at .7206 to .7230 is potential resistance. Trader reaction to this zone should set the tone on Friday.

Daily Swing Chart Technical Forecast

Ahead of the opening on Friday, we’re looking at resistance at .7206 to .7232 and support at .7159 to .7123.

We could see a choppy, two-sided trade if the NZD/USD stays inside the minor range at .7159 to .7206 or the slightly bigger range at .7122 to .7232.

A sustained move over .7232 will indicate the buying is getting stronger. This could trigger an acceleration to the upside.

A sustained move under .7122 will signal the presence of sellers. This could trigger a possible acceleration to the downside.