NZD/USD Forex Technical Analysis – Trader Reaction to .7027 Retracement Level Sets the Tone

The New Zealand Dollar rose on Friday despite a stronger U.S. Dollar and higher Treasury yields. The currency was likely supported by rising commodity prices, increased demand for riskier assets and end-of-the-quarter position-squaring.

On Friday, the NZD/USD settled at .6999, up 0.0047 or +0.68%.

The NZD/USD spent most of the week under pressure as bond yields plunged after a move by the government to reduce speculation in the housing market. Sellers were also driven by the notion that the Reserve Bank of New Zealand (RBNZ) would refrain from raising rates anytime soon.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through .6943 will signal a resumption of the downtrend. The main trend will change to up on a trade through .7270. This is highly unlikely, but there is room for a normal retracement of its recent break.

The minor trend is also down, but a minor bottom has formed at .6943.

The NZD/USD is currently trading inside a major retracement zone at .7027 to .6924. This zone is controlling the near-term direction of the Forex pair.

The minor range is .7270 to .6943. Its 50% level at .7107 is the primary upside target price. Since the main trend is down, sellers are likely to come in on a test of this level.

Daily Swing Chart Technical Analysis

The direction of the NZD/USD on Monday is likely to be determined by trader reaction to the main 50% level at .7027.

Bullish Scenario

A sustained move over .7027 will indicate the presence of buyers. If this move is able to create enough upside momentum then look for the rally to possibly extend into the minor pivot at .7107 over the short-run.

Bearish Scenario

A sustained move under .7027 will signal the presence of sellers. This could lead to a retest of last week’s minor bottom at .6943, followed closely by the main Fibonacci level at .6924. If this level fails then look for the selling to possibly extend into the November 23, 2020 main bottom at .6897.