NZD/USD Forex Technical Analysis – Testing Lower End of Long-Term Retracement Zone at .6231

The New Zealand Dollar is trading nearly flat on Tuesday after hitting its lowest level in nearly two years against the U.S. Dollar. The commodity-linked currency fell overnight to a multi-year low and oil prices fell more than 1%, hurt by fears of recession and an economic slowdown in China, the top importer. Meanwhile, investors seeking safe-haven protection continued to move money into the U.S. Dollar.

The kiwi has been especially bearish lately, in part because New Zealand is running a current account deficit.

“Industrial commodities have surged well ahead of the more modest strength in NZ’s agricultural export prices,” said Alan Ruskin, macro strategist at Deutsche.

At 11:52 GMT, the NZD/USD is trading .6316, down 0.0005 or -0.08%.

After an early session setback, the NZD/USD did manage to turn higher amid a turnaround in European and U.S. stock markets, however, the move is not likely to last unless there is a dramatic turnaround in demand for higher risk assets.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through the intraday low at .6284 will signal a resumption of the downtrend. A move through .6569 will change the main trend to up.

The minor range is .6569 to .6284. Its 50% level at .6427 is the nearest resistance.

The long-term range is .5469 to .7465. The market is currently trading inside its retracement zone, making the 50% level at .6467 resistance and the 61.8% level at .6231 support.

Daily Swing Chart Technical Forecast

The direction of the NZD/USD on Tuesday is likely to be determined by trader reaction to .6321.

Bearish Scenario

A sustained move under .6321 will indicate the presence of sellers. Taking out the intraday low at .6284 will indicate the selling pressure is getting stronger with the next target the long-term Fibonacci level at .6231.

The Fib level is critical support because a failure to hold this level could trigger an acceleration to the downside with the May 15, 2020 main bottom at .5921 the key target level.

Bullish Scenario

A sustained move over .6321 will signal the presence of buyers. Taking out the intraday high at .6348 will indicate the buying is getting stronger. This could trigger a surge into the minor 50% level at .6427, followed by the long-term 50% level at .6467.