NZD/USD Forex Technical Analysis – Weekly Chart Indicates Strength Over .6714, Weakness Under .6633

The New Zealand Dollar finished the week lower although there was a technical bounce late in the week due to oversold conditions better-than-expected domestic data and mixed U.S. economic data.

The New Zealand Dollar was dragged lower by the severe sell-off in the Australian Dollar. A similar miss in New Zealand inflation data released earlier in April drove the chances of a Reserve Bank of New Zealand rate cut in May to 50 percent. After the release of the Australia CPI data, the odds moved to a 66 percent chance.

For the week, the NZD/USD settled at .6656, down 0.0031 or -0.47%.

Late in the week, the New Zealand Dollar clawed back some of its earlier weekly losses after Statistics New Zealand reported that the trade balance logged a surplus of NZ$922 million in March, which was far above the median forecast of NZ$131 million. However, the news wasn’t all rosy. The quarterly figure was dismal. The trade balance showed a deficit of NZ$1.0 billion in the March quarter even as exports rose 2.0%, while imports fell 2.5%.

The price action in the New Zealand Dollar will be primarily driven by the Employment Change and Unemployment Rate report on Wednesday. Volatility this week could be fueled by the U.S. Federal Reserve’s interest rate and monetary policy decisions on Wednesday.

Weekly Technical Analysis

The main trend is down according to the weekly swing chart. A trade through .6580 will signal a resumption of the downtrend with the next target the main bottom at .6424. The main trend will change to up on a trade through .6939.

The minor trend is also down. A trade through .6784 signal a resumption of the uptrend. This will also shift momentum to the upside.

The main range is .6424 to .6970. Its retracement zone at .6697 to .6633 is controlling the longer-term direction of the NZD/USD. The Forex pair closed inside this zone last week.

The short-term range is .6939 to .6580. If the short-covering continues then its retracement zone at .6760 to 6802 will become the primary upside target.

Weekly Technical Forecast

Based on last week’s close at .6656 and the price action, the direction of the NZD/USD this week is likely to be determined by trader reaction to the main Fibonacci level at .6633.

Bullish Scenario

Holding above the Fibonacci level at .6633 will indicate the presence of buyers. If this creates enough upside momentum then look for the rally to possibly extend into the resistance cluster formed by the main 50% level at .6697 and the downtrending Gann angle at .6699. This is followed by a long-term uptrending Gann angle at .6714.

Overtaking the Gann angle at .6714 could trigger an acceleration into the short-term 50% level at .6760, the minor top at .6784 and the short-term Fibonacci level at .6802.

Bearish Scenario

A sustained move under .6633 will signal the presence of sellers. This could trigger an acceleration to the downside into last week’s low at .6580 and the long-term uptrending Gann angle at .6569. This is another trigger point for a break into the next uptrending Gann angle at .6497.