NZD/USD Poised for Breakout with .6961 – .7022 on Radar

The New Zealand Dollar is trading higher on Thursday and in a position to breakout to the upside after testing its highest level since November 25 earlier in the session.

Speculative buyers were looking to push the Kiwi higher after U.S. inflation came in no hotter than expected on Wednesday. The move triggered a short-covering rally in the New Zealand Dollar as a wave of investors aggressively shed long U.S. Dollar positions which had been keeping a lid on prices since November 25.

At 09:40 GMT, the NZD/USD is trading .6874, up 0.0027 or +0.40%.

The Kiwi jumped from a surprise retreat in the greenback as data showed U.S. annual inflation rose to a 40-year high in December, but met pre-report expectations.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The main trend changed to up earlier today when buyers drove through the last main top at .6857. It was reaffirmed when they took out the December 1 main top at .6868. A trade through .6733 will change the main trend to down.

The minor range is .6702 to .6881. Its retracement zone at .6792 to .6770 is the nearest support. This zone will move higher if buyers take out .6881.

On the upside, the NZD/USD is currently testing a 50% level at .6877. This level is a potential trigger point for an acceleration to the upside.

The main range is .7219 to .6702. Its retracement zone at .6961 to .7022 is the primary upside target area.

Daily Swing Chart Technical Forecast

The direction of the NZD/USD on Thursday is likely to be determined by trader reaction to .6877.

Bullish Scenario

A sustained move over .6877 will indicate the presence of buyers. If this move is able to generate enough upside momentum then look for a surge into the main 50% level at .6961 over the near-term.

Bearish Scenario

A sustained move under .6877 will signal the presence of sellers. If this price action creates enough downside momentum then look for a short-term pullback into .6791 to .6770.