NZD/USD Forex Technical Analysis – Strengthens Over .7170, Weakens Under .7121

The New Zealand Dollar is edging lower early Monday on profit-taking following Friday’s surge to its highest level since June 11.

The Kiwi’s spike to the upside was fueled by a report that showed the U.S. economy created the fewest jobs in seven months in August as hiring in the leisure and hospitality sector stalled amid a resurgence in COVID-19 infections, which weighed on demand at restaurants and hotels.

At 04:45 GMT, the NZD/USD is trading .7140, down 0.0012 or -0.16%.

Other details of the Labor Department’s closely watched employment report on Friday were fairly strong, with the unemployment rate falling to a 17-month low of 5.2% and July job growth revised sharply higher. Wages increased a solid 0.6% and fewer people were experiencing long spells of unemployment.

Trading volumes would remain low with U.S. markets closed for the Labor Day holiday, traders said. Meanwhile, traders aren’t sure how to play the Kiwi after New Zealand reported 20 new cases of COVID-19 for a third day in a row on Monday, ahead of a government decision on whether to lift restrictions enforced in most of the country.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through .7170 will signal a resumption of the uptrend. A move through .6806 will change the main trend to down.

The main range is .7316 to .6806. The NZD/USD is currently trading on the bullish side of its retracement zone at .7121 to .7061. Making this area support.

The longer-term support is the retracement zone at .7027 to .6924.

Daily Swing Chart Technical Forecast

The direction of the NZD/USD on Monday is likely to be determined by trader reaction to .7152.

Bullish Scenario

A sustained move over .7152 will signal the presence of buyers. The first upside target is Friday’s high at .7170. Taking out this level with strong volume could trigger an acceleration to the upside with the minor top at .7243 the next target, followed by the May 26 main top at .7316.

Bearish Scenario

A sustained move under .7152 will indicate the presence of sellers. The first downside target is the main Fibonacci level at .7121. Buyers could come in on the first test of this level.

If .7121 fails as support then look for the selling pressure to possibly extend into the 50% level at .7061.