NZD/USD Forex Technical Analysis – Strengthens Over .7130, Weakens Under .7085

The New Zealand Dollar is inching higher early Wednesday on position-squaring ahead of the U.S. Federal Reserve’s monetary policy announcements at 18:00 GMT. The move follows a sharp break the previous session that drove the kiwi to its lowest level since April 14.

The Fed’s two-day meeting was set to end on Wednesday and it is due to issue a policy statement afterward. So far Fed officials, led by Chair Jerome Powell, have said rising inflationary pressures are transitory and ultra-easy monetary settings will stay in place for some time.

Recent economic data has raised concerns that price pressure could force an earlier stimulus withdrawal. This has been helping drive the U.S. Dollar higher against the New Zealand Dollar.

At 01:37 GMT, the NZD/USD is trading .7128, up 0.0004 or +0.05%.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The downtrend was reaffirmed on Tuesday when sellers took out the last main bottom at .7115. A move through .7316 will change the main trend to up. This is highly unlikely, however, due to the prolonged move down in terms of price and time, the NZD/USD may be ripe for a closing price reversal bottom.

The minor trend is also down. A trade through .7243 will change the minor trend to up. This will also shift momentum to the upside.

The short-term range is .6943 to .7316. The NZD/USD is currently testing its retracement zone at .7130 to .7085.

The main range is .7465 to .6943. Its retracement zone at .7204 to .7266 is resistance. It’s also controlling the near-term direction of the NZD/USD.

Daily Swing Chart Technical Forecast

The direction of the NZD/USD on Wednesday is likely to be determined by trader reaction to the short-term 50% level at .7130.

Bearish Scenario

A sustained move under .7129 will indicate the presence of sellers. This could trigger a break through .7105 and into the short-term Fibonacci level at .7085. This is a potential trigger point for an acceleration to the downside with a long-term 50% level at .7027 the next likely downside target.

Bullish Scenario

A sustained move over .7130 will signal the presence of buyers. The first upside target is a minor pivot at .7174, followed by the main 50% level at .7204.