NZD/USD Forex Technical Analysis – Supported by Slightly Better Risk Sentiment
The New Zealand Dollar is edging higher on Tuesday after touching its lowest level since January 6 the previous session. The Kiwi is being supported by a jump in the Australian Dollar, which rose after the Reserve Bank of Australia (RBA) raised its benchmark rate by 25 basis points. The move was widely expected. The central bank also indicated that more rate hikes were necessary in order to tame inflation.
At 05:13 GMT, the NZD/USD is trading .6320, up 0.0015 or +0.23%.
The Kiwi is also being underpinned by a dip in Treasury yields and a lower U.S. Dollar. Risk appetite is also a little better today, helping to drive demand for the higher-risk currency.
Looking ahead, the Reserve Bank of New Zealand (RBNZ) holds its next policy meeting on Feb. 22 and is widely expected to lift rates by 50 basis points to 4.75% and also flag further tightening ahead given inflation is running hot at 7.2%.
The financial markets are also implying that rates will peak at 5.25%, a little below the central bank’s own projection of 5.5%.
Daily NZD/USD Technical Analysis
The main trend is down according to the daily swing chart. However, momentum is trending lower.
A trade through .6191 will change the main trend to down. A move through .6538 will signal a resumption of the uptrend.
The minor trend is down. This is controlling the momentum. A new main bottom was formed at .6270.
The nearest support is a long-term Fibonacci level at .6231. The closest resistance is a short-term 50% level at .6365, followed by a short-term retracement zone at .6404 – .6436.
Daily NZD/USD Technical Forecast
Trader reaction to .6305 is likely to determine the direction of the NZD/USD on Tuesday.
A sustained move over .6306 will indicate the presence of buyers. If this move creates enough upside momentum then look for a surge into the first short-term 50% level at .6365.
Overtaking .6365 will indicate the buying is getting stronger. This could drive the NZD/USD into .6404 – .6436. Look for sellers to come in on a test of this area.
A sustained move under .6305 will signal the presence of sellers. This could lead to a test of the minor bottom at .6270. If this level fails as support then look for the selling to extend into the long-term Fibonacci level at .6231.