NZD/USD Forex Technical Analysis – Strengthens Over .7232, Weakens Under .7206

The New Zealand Dollar is inching higher early Friday on the back of sharply higher bond yields and rising commodity prices. A dip in U.S. Treasury yields and a weaker U.S. Dollar is also contributing to the early strength.

On Thursday, the Kiwi was underpinned by weaker-than-expected U.S. economic data that triggered a break in U.S. Treasury yields, subsequently dampening demand for the greenback.

At 04:20 GMT, the NZD/USD is trading .7215, down 0.0007 or -0.10%.

In New Zealand, 10-year yields were a steep 21 basis points higher for the week at 1.54% as markets braced for the first monetary policy meeting of the year on February 24. While the Reserve Bank of New Zealand (RBNZ) is expected to keep rates at 0.25%, analysts are less sure what it might say about other stimulus measures given the surprising strength of the domestic economy.

In the United States, first-time filings for unemployment insurance jumped last week in a sign of continuing strife for the labor market. New claims totaled 861,000, the highest level in a month and above the Dow Jones estimate of 773,000, the Labor Department reported Thursday.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum is trending lower. A trade through .7268 will reaffirm the uptrend, while a move through .7158 changes the main trend to down.

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

The main range is .7003 to .7316. Its retracement zone at .7159 to .7123 is support. This zone stopped the selling on Wednesday at .7158.

The short-term range is .7316 to .7096. The NZD/USD is currently testing its retracement zone at .7206 to .7232. Trader reaction to this area should set the tone on Friday.

Daily Swing Chart Technical Forecast

The early price action suggests the direction of the NZD/USD on Friday will be determined by trader reaction to the short-term 50% level at .7206.

Bullish Scenario

A sustained move over .7206 will indicate the presence of buyers. This could trigger a quick rally into the Fibonacci level at .7232. This is a potential trigger point for an acceleration to the upside with .7268 the next likely upside target.

Bearish Scenario

A sustained move under .7206 will signal the presence of sellers. If this move is able to create enough downside momentum then look for a possible break into the support cluster at .7159 to .7158.

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