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James Hyerczyk

The New Zealand Dollar closed higher on Tuesday on growing hopes for a U.S.-China trade agreement. President Trump provided the fuel for the initial jump in prices when he said on Monday that he expected to sign a significant part of the trade deal ahead of schedule.

The Kiwi was also boosted by weaker than expected U.S. economic data, which weighed on demand for the greenback. On Tuesday, the Conference Board reported that consumer confidence fell to 125.9 from an upwardly revised 126.3. Traders were looking for a reading of 128.2.

On Tuesday, the NZD/USD settled at .6356, up 0.0007 or +0.11%.

The U.S. Federal Reserve is widely expected to cut its benchmark interest rate by 25-basis points on Wednesday. However, Kiwi traders will be focused on the outlook for future rate cuts. Economists believe the Fed will pause in December and cut again in March 2020. The Reserve Bank of New Zealand is expected to follow with its own rate cut in November. This is to prevent the Kiwi from strengthening against the greenback and hurting exports.


Daily Technical Analysis

The main trend is up according to the daily swing chart. A trade through .6436 will signal a resumption of the uptrend. The main trend will change to down on a trade through .6241.

The minor trend is also up. A trade through .6334 will change the minor trend to down. This will also shift momentum to the downside.

The intermediate range is .6241 to .6436. Its 50% level at .6338 is support. This level has been tested successfully twice this week.

The main range is .6204 to .6436. Its retracement zone at .6320 to .6293 is the value zone. Since the main trend is up, buyers are expected to come in on a test of this zone. If it fails to hold as support then look for the selling pressure to continue.


Daily Technical Forecast

Based on this week’s price action and Tuesday’s close at .6356, the direction of the NZD/USD on Wednesday is likely to be determined by trader reaction to the uptrending Gann angle at .6341.

Bullish Scenario

A sustained move over .6341 will indicate the presence of buyers. This angle, moving up at a rate of .0001 per day, has been guiding the NZD/USD higher since the .6241 bottom on October 16.

The first upside target is a downtrending Gann angle at .6376. Overcoming this angle could trigger a further rally into the short-term retracement zone at .6385 to .6397. ‘

Bearish Scenario

A sustained move under .6341 will signal the presence of sellers. The first two targets are a 50% level at .6338 and a minor bottom at .6334. If they fail as support then look for the selling to possibly extend into the main 50% level at .6320. This is a potential trigger point for an acceleration into the main Fibonacci level at .6293.

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