NZD/USD Forex Technical Analysis – Vulnerable to Steep Break Under .5844
The New Zealand Dollar is trading flat early Wednesday as traders brace for the U.S. Federal Reserve’s interest rate decision, scheduled to be released at 18:00 GMT. Traders are looking for the Fed to announce an outsized 75 basis points rate hike and a plan to keep lifting them above 4.0%.
At 02:12 GMT, the NZD/USD is trading .5903, up 0.0006 or +0.11%.
On Tuesday, the Kiwi fell 0.99% as global risk sentiment remained fragile and yield spreads moved further against it. Additionally, pessimism over the global economy, and particularly China, has combined with falling commodity prices to undermine the resource-rich currency.
The bias is clearly to the downside, but the current selling pressure has been orderly. This could change on Wednesday with the NZD/USD vulnerable to the start of a steep decline under the April 3, 2020 main bottom at .5844.
With most traders anticipating a 75 basis point rate hike, the Fed could surprise with an extremely bearish full-percentage point rate hike.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart. A trade through .5886 will signal a resumption of the downtrend. A move through .5844 will reaffirm the downtrend. The main trend will change to up if buyers take out .6162.
The minor trend is also down. A trade through .6002 will change the minor trend to up. This will also shift momentum to the upside.
The nearest resistance is layered at .5944, .5956 and .6024.
Daily Swing Chart Technical Forecast
Trader reaction to .5897 is likely to determine the direction of the NZD/USD on Wednesday.
A sustained move under .5897 will indicate the presence of sellers. Taking out .5844 will indicate the selling pressure is getting stronger. This could also signal the start of a steep sell-off with the March 19, 2020 main bottom at .5469 the next major downside target. This is also known as the pandemic low.
A sustained move over .5897 will signal the presence of buyers. The first upside target is a minor pivot at .5844, followed by another minor pivot at .5956, a minor top at .6002 and a resistance cluster at .6024 – .6026. Because of the current set-up, any rally is likely to be a labored event.
Taking out .5886 then closing higher for the session will form a potentially bullish closing price reversal bottom. This won’t change the trend, but if confirmed, it could trigger the start of a 2 to 3 day counter-trend rally.