NZD/USD Forex Technical Analysis – Trend Changes to Down on Trade Through .7006

The New Zealand Dollar is trading higher against the U.S. Dollar late Tuesday as progress toward a massive U.S. government spending bill and COVID-19 relief measures dampened demand for the safe-haven greenback. Investors now await interest rate cues from the Federal Reserve Wednesday afternoon in the central bank’s final meeting of the year.

At 21:12 GMT, the NZD/USD is trading .7092, up 0.0012 or +0.16%.

Buyers are also speculating on a strong New Zealand GDP number on Thursday. New Zealand is set to record its biggest ever increase in GDP this week, but economists say the question now is whether the recovery can be sustained.

Stats NZ will reveal on Thursday how much the economy rebounded in the third quarter of this year. Most predictions are for an increase of between 13 percent and 14 percent. It will follow a 12.2 percent fall in the second quarter, when the effects of the lockdown were felt.

Hopes that U.S. lawmakers can agree on $1.4 trillion in spending and more clarity about COVID-19 vaccine distribution have whetted investors’ risk appetite, driving them away from safe-haven currencies.

The Fed, which begins a two-day meeting later on Tuesday, is expected to keep its key overnight interest rate pinned near zero and to signal it will stay there for years to come. Such moves would further boost investors’ confidence for risk-taking.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. However, there was a slight shift in momentum to the downside on Tuesday when the previous session’s closing price reversal top was confirmed.

A trade through .7120 will negate the closing price reversal top and signal a resumption of the uptrend. The main trend will change to down on a move through .7006.

The first minor range is .7006 to .7120. Its 50% level at .7063 is support.

The second minor range is .6897 to .7120. Its 50% level at .7008 is additional support.

The third minor range is .6811 to .7120. Its 50% level at .6965 is still another potential support level.

Short-Term Outlook

Based on Tuesday’s price action, the direction of the NZD/USD on Wednesday is likely to be determined by trader reaction to the first pivot at .7063.

Bullish Scenario

A sustained move over .7063 will indicate the presence of buyers. If this creates enough upside momentum then look for another attempt to breakout over .7120.

Bearish Scenario

A sustained move under .7063 will signal the presence of sellers. This could trigger a steep break into the support cluster at .7008 to .7006. The main trend will change to down if .7006 fails as support.