NZD/USD Forex Technical Analysis – Sustained Move Over .7255 Could Create Momentum Needed to Challenge .7316

The New Zealand Dollar is trading higher early Tuesday after hitting its highest level since January 8. The catalysts behind its strength are improved market sentiment and an optimistic economic survey.

New Zealand inflation expectations for the year posted a large rise to 1.77%, from 1.23% previously, a survey by the central bank showed, while two-year expectations rose 30 basis points to 1.89%.

At 08:16 GMT, the NZD/USD is trading .7237, up 0.0019 or +0.26%.

“Markets have acknowledged New Zealand’s successful COVID management and ensuing economic recovery, but recent economic data has surprised even the most optimistic pundits,” Westpac analysts said in a note to clients.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The uptrend resumed on Monday when buyers took out the swing top at .7226. It was reaffirmed when the Kiwi crossed the main top at .7248. Today’s price action suggests buy stops may have been behind the earlier rally rather than aggressive new buyers. They may regroup following a pullback, however. The main trend will change to down on a move through .7136.

The short-term range is .7316 to .7096. The NZD/USD is currently straddling its retracement zone at .7206 to .7232. Trader reaction to this zone is likely to set the near-term direction of the Forex pair.

The main range is .7003 to .7316. Its retracement zone at .7159 to .7123 is the key support.

Daily Swing Chart Technical Forecast

The direction of the NZD/USD the rest of the session on Tuesday is likely to be determined by trader reaction to the short-term Fibonacci level at .7232.

Bullish Scenario

A sustained move over .7232 will indicate the presence of buyers. Taking out the intraday high at .7254 will indicate the buying is getting stronger. This could trigger an acceleration to the upside with the January 6 main top at .7316 the next key target.

Bearish Scenario

A sustained move under .7232 will signal the presence of sellers. This could trigger a break into the short-term 50% level at .7206. Buyers could come in on the first test of this level. A failure to hold this price could trigger an eventual break into the main retracement zone at .7159 to .7123.

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