NZD/USD Forex Technical Analysis – Strengthens Over .7160, Weakens Under .7122

The New Zealand Dollar is under pressure for a second session on Friday, weighed down by a strengthening U.S. Dollar. The greenback is being lifted by growing confidence that the U.S. economic recovery will outpace global peers. The catalyst behind the move is signs of resilience in the labor market, with closely watched Non-Farm Payroll figures due Friday.

At 03:54 GMT, the NZD/USD is at .7145, down 0.0011 or -0.16%.

The greenback is also getting support from a rise in longer-term U.S. Treasury yields, which came as traders positioned for a massive fiscal stimulus package.

Yields on New Zealand 10-year bonds have also shot to their highest since the market mayhem of last March at 1.41%, having climbed almost 25 basis points in just a week.

Yields have been on the rise since the Reserve Bank of New Zealand (RBNZ) trimmed the amount of bonds it would buy this week, and took off on Wednesday when local jobs data proved far stronger than forecast.

On Friday, New Zealand government bonds were little changed with yields up half a basis point across the curve.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, but momentum is trending lower. A trade through .7248 will signal a resumption of the uptrend. The main trend will change to down on a move through .7106. Taking out .7096 will reaffirm the downtrend.

The short-term range is .7316 to .7096. Its retracement zone at .7206 to .7232 is resistance.

The main range is .7003 to .7316. Its retracement zone at .7159 to .7123 is support, and a potential trigger point for an acceleration to the downside.

Daily Swing Chart Technical Forecast

The early price action suggests the direction of the NZD/USD on Friday is likely to be determined by trader reaction to the short-term 50% level .71595.

Bearish Scenario

A sustained move under .7159 will indicate the presence of sellers. If this move creates enough downside momentum then look for a break into .7122, followed by .7106 and .7096.

Taking out .7096 with heavy volume could trigger an acceleration to the downside with .7003 the next major target.

Bullish Scenario

A sustained move over .7160 will signal the presence of sellers. If this move creates enough upside momentum then look for a surge into .7206 to .7232 over the short-term.

For a look at all of today’s economic events, check out our economic calendar.