NZD/USD Forex Technical Analysis – Testing Short-Term Retracement Zone at .6656 to .6632

The New Zealand Dollar is trading lower on Friday on deteriorating market sentiment. Intensifying geopolitical tensions in the Middle East are encouraging investors to shed higher-yielding assets like the Kiwi and move money into safe-havens like U.S. Treasurys and the Japanese Yen. The market mood turned sour earlier Friday as news broke that a U.S. air strike had killed a top Iranian commander.

At 09:46 GMT, the NZD/USD is trading .6652, down 0.0048 or -0.71%.

We could see an acceleration to the downside over the near-term if Iran decides to retaliate against the U.S. Iranian Foreign Minister Mohammad Javad Zarif warned Friday that the targeted killing of Soleimani was “extremely dangerous & a foolish escalation.”

Daily Technical Analysis

The main trend is down according to the daily swing chart. A trade through .6758 will signal a resumption of the uptrend. The main trend will change to down on a move through .6554.

The short-term range is .6554 to .6758. Its retracement zone at .6656 to .6632 is the first downside target. It’s currently being tested.

The major range is .6791 to .6204. Its retracement zone at .6567 to .6497 is the next downside target. This zone is controlling the near-term direction of the NZD/USD.

Daily Technical Forecast

Based on the early price action and the current price at .6652, the direction of the NZD/USD is likely to be determined by trader reaction to the short-term 50% level at .6656.

Bearish Scenario

A sustained move under .6656 will indicate the presence of sellers. This could trigger a break into the short-term Fibonacci level at .6632. If this fails then look for the selling to possibly extend into the short-term uptrending Gann angle at .6614. This is a potential trigger point for an acceleration into the major Fibonacci support at .6567.

Bullish Scenario

A sustained move over .6656 will signal the presence of buyers. The next two upside targets come in at .6674 and .6698.

Side Notes

Watch the price action and read the order flow at .6656 to .6632. Since the main trend is up, buyers could come in to support the NZD/USD. They are going to try to form a secondary higher bottom. Sellers are going to try to take out this area. They are going to try to change the trend to down.

We’re in a news driven market so watch the headlines. A retaliation by Iran against the United States is likely to trigger an acceleration to the downside.