NZD/USD Forex Technical Analysis – Weakens Under .7206, Strengthens Over .7232

The New Zealand Dollar is edging lower on Thursday after posting a second straight higher close the previous session. Yesterday’s rally was fueled by a report that showed New Zealand’s jobless rate surprisingly dropped in the fourth quarter.

The seasonally adjusted unemployment rate dropped to 4.9% in the December 2020 quarter from 5.3% in the September 2020 quarter, Statistics New Zealand said in its statement. That beat forecasts by economists polled by Reuters who had expected an unemployment rate of 5.6%.

At 08:21 GMT, the NZD/USD is trading .7201, down 0.0009 or -0.12%.

Also helping to underpin the Kiwi is increasing global risk sentiment and higher domestic bond yields. New Zealand yields have been on the rise since the Reserve Bank (RBNZ) trimmed the amount of bonds it would buy this week, and took off on Wednesday when local jobs data proved far stronger than forecast.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, but the NZD/USD has struggled to sustain this upside bias since forming a main top at .7248. Nonetheless, buyers still came in at .7106 on January 28 to defend the uptrend.

A trade through .7248 will reaffirm the uptrend with .7316 the next potential upside target. A trade through .7106 will change the main trend to down, while a move through .7096 could trigger an acceleration to the downside.

The short-term range is .7316 to .7096. The NZD/USD is currently testing its retracement zone at .7206 to .7232.

The main range is .7003 to .7316. Its retracement zone at .7159 to .7123 is support.

Daily Swing Chart Technical Forecast

The early price action suggests the direction of the NZD/USD will be determined by trader reaction to .7206.

Bullish Scenario

A sustained move over .7206 will indicate the presence of buyers. This could trigger a surge into the Fibonacci level at .7232. Taking out .7232 could extend the rally into the main top at .7248.

A breakout over .7248 will reaffirm the uptrend. This is a potential trigger point for an acceleration to the upside with .7316 a potential upside target.

Bearish Scenario

A sustained move under .7206 will signal the presence of sellers. If this move generates enough downside momentum then look for the selling to possibly extend into .7159 to .7123. Since the main trend is up, buyers could come in to defend the trend.

The trigger point for an acceleration to the downside is .7096.

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