NZD/USD Forex Technical Analysis – Strengthens Over .6710, Weakens Under .6687

The New Zealand Dollar continues to feel pressure from a Reserve Bank of New Zealand report that showed it is at a “very early stage” in refreshing its “unconventional monetary policy strategy.”

Traders are also awaiting the European Central Bank’s latest monetary policy decision on Thursday at 11:45 GMT and ECB President Mario Draghi’s press conference at 12:30 GMT. The ECB is widely expected to announce further stimulus measures to combat stalling growth in the Euro Zone. Meanwhile, the U.S. Federal Reserve is expected to cut U.S. interest rates by at least 25-basis points on July 31.

The RBNZ cut its official cash rate in May to a record low at 1.5 percent. With the backdrop of lower global rates, investors believe the central bank’s benchmark rate will hit 1.0 percent by year-end.

At 05:47 GMT, the NZD/USD is trading .6697, down 0.0009 or -0.13%.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart, however, momentum has been trending lower since the formation of the closing price reversal top on July 19 at .6791.

A trade through .6791 will negate the closing price reversal top and signal a resumption of the uptrend. The main trend will change to down on a trade through .6583.

On the upside, the resistance is the longer-term retracement zone at .6710 to .6746.

The short-term range is .6583 to .6791. Its retracement zone at .6687 to .6662 is the first downside target. Since the main trend is up, buyers could come in on the first test of this area.

Another long-term retracement zone support area is .6636 to .6599. This is the last potential support area before the .6583 main bottom.

Daily Swing Chart Technical Forecast

Based on Wednesday’s price action and the current price at .6697, the direction of the NZD/USD on Thursday is likely to be determined by trader reaction to the short-term 50% level at .6687.

Bullish Scenario

A sustained move over .6687 will indicate the presence of buyers. The first upside target is the 50% level at .6710. Overtaking this level could trigger an acceleration to the upside.

Bearish Scenario

A sustained move under .6710 will indicate the presence of sellers. Taking out .6687 could trigger an acceleration to the downside with the next target the short-term Fibonacci level at .6662. If this fails then look for the selling to possibly extend into the major 50% level at .6636.