NZD/USD Forex Technical Analysis – Testing Retracement Zone; Strengthens Over .7121, Weakens Under .7061

The New Zealand Dollar is inching lower early Thursday as investors are hoping to end a three-day losing streak against the U.S. Dollar. Global risk aversion is helping to pressure prices while bullish traders continue to bet on a Reserve Bank of New Zealand (RBNZ) rate hike next month.

At 03:49 GMT, the NZD/USD is trading .7092, down 0.0009 or -0.12%.

In economic news, New Zealand manufacturing sales volumes fell 0.1 percent in the second quarter, data from Statistics New Zealand showed on Thursday. Volumes for dairy and meat products, the country’s biggest export earners, rose 0.1 percent.

Later today at 12:30 GMT, traders will get the opportunity to react to the latest report on U.S. Weekly Unemployment Claims. Several Fed speakers are on tap at about 15:05 GMT and FOMC Member Williams speaks at 18:00 GMT. He could move the NZD/USD late in the session.

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 trade through .6806 will change the main trend to down.

The main range is .7316 to .6806. The NZD/USD is currently testing its retracement zone at .7061 to .7121. This zone is controlling the near-term direction of the Forex pair.

On the downside, additional support is a long-term 50% level at .7027, followed by the short-term 50% level at .6988.

Daily Swing Chart Technical Forecast

The direction of the NZD/USD on Thursday is likely to be determined by trader reaction to .7121.

Bearish Scenario

A sustained move under .7121 will signal the presence of sellers. If this continues to generate enough downside momentum then look for the selling to possibly extend into .7061. Look for buyers on the first test of this level.

Taking out .7061 will indicate the selling pressure is getting stronger. This could trigger a quick plunge into .7027.

Bearish Scenario

A sustained move over .7121 will indicate the return of buyers. If this creates enough upside momentum then look for a surge into the main top at .7170.

The daily chart indicates there is plenty of room to the upside to rally so .7170 is likely a trigger point for an acceleration to the upside.