NZD/USD Forex Technical Analysis – Trading Inside Long-Term Retracement Zone at .6497 to .6567

The New Zealand Dollar is trading lower early Wednesday as traders square positions ahead of today’s U.S. Federal Reserve interest rate and monetary policy decisions. The Fed is widely expected to leave policy unchanged.

There were no reports out of New Zealand, but the price behavior is still being influenced by the potential impact on the economy by the coronavirus. The virus is not expected to impact the New Zealand economy directly, but it is likely to feel some pain if China’s economy suffers a setback.

At 04:04 GMT, the NZD/USD is trading .6533, down 0.0013 or -0.21%.

Daily Technical Analysis

The main trend is down according to the daily swing chart. It turned down on Monday when sellers took out the swing bottom at .6581. It was reaffirmed when the selling extended through .6554 and .6522. The main trend will change to up on a move through .6629.

The major range is .6791 to .6204. The NZD/USD is currently trading inside its retracement zone at .6497 to .6567. This zone is controlling the longer-term direction of the Forex pair.

The main range is .6204 to .6758. Its retracement zone at .6481 to .6416 is the primary downside target of this sell-off. Buyers could step in on a test of this area.

Daily Technical Forecast

Based on the early price action and the current price at .6533, the direction of the NZD/USD the rest of the session on Wednesday is likely to be determined by trader reaction to the downtrending Gann angle at .6558.

Bearish Scenario

A sustained move under .6558 will indicate that sellers are still in control. If the selling pressure continues then look for a retest of yesterday’s low at .6521. This is a potential trigger point for an acceleration into the major 50% level at .6497, followed by the main 50% level .6481.

Bullish Scenario

Overtaking .6558 will signal the presence of buyers. The first upside target is the major Fibonacci level at .6567. The short-covering rally could strengthen over this level.

Side Notes

Traders may start to downplay the impact of the coronavirus and shift their focus to next week’s Reserve Bank of New Zealand interest rate and monetary policy decisions.