NZD/USD Hovering Above Nearly 2-Year Bottom at .6381

The New Zealand Dollar is under pressure late Friday, putting it in a position to challenge its June 15, 2020 main bottom at .6381. The price action represents follow-through selling related to the stunning reversal the previous session.

On Thursday, the Kiwi took a nosedive as traders raced back into the U.S. Dollar on expectations the Federal Reserve will tighten monetary policy faster than peers to stem runaway inflation.

At 20:00 GMT, the NZD/USD is trading .6405, down 0.0021 or -0.32%.

In U.S. economic news, the Labor Department presented stronger-than-expected jobs data with nonfarm payrolls increasing by 428,000 jobs in April, versus expectations of 391,000 job additions, underscoring the economy’s strong fundamentals despite a contraction in gross domestic product in the first quarter.

Additionally, the unemployment rate remained unchanged at 3.6% in the month, while average hourly earnings increased 0.3% against a forecast of a 0.4% rise.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart, a trade through .6393 will signal a resumption of the downtrend. A move through .6569 will change the main trend to up.

On the upside, the nearest resistance is a 50% level at .6467, followed by another 50% level at .6519.

Short-Term Outlook

The direction of the NZD/USD into the close on Friday will be determined by trader reaction to .6467.

Look for the downside bias to continue late in the day on a sustained move under .6467. This could lead to a test of the long-term main bottom at .6381. This is a potential trigger point for an acceleration to the downside with the long-term Fibonacci level at .6231 the next major target price.

A sustained move over .6467 could fuel the start of a short-covering rally. Clawing through .6520 will indicate the buying is getting stronger. This could lead to a test of the main top at .6569.

Taking out .6569 will change the main trend to up. This could trigger a surge into a pivot at .6604, followed by a resistance cluster at .6646 – .6648.