NZD/USD Reaction to .6827 Sets the Tone on Thursday

The New Zealand Dollar is trading nearly flat early Thursday after closing sharply higher the previous session. Today’s price action suggests disappointment in the country’s latest GDP figure, while Wednesday’s strong rally was fueled after the U.S. Federal Reserve moved to a hawkish monetary policy but failed to deliver a tougher surprise.

At 01:12 GMT, the NZD/USD is trading .6839, up 0.0001 or +0.01%.

In economic news, New Zealand’s gross domestic product (GDP) returned to growth in the final quarter of 2021, but production-based output grew by only 3.0% in the quarter, missing economists’ median expectations of a 3.2% rise.

On Wednesday, the Fed raised interest rates by the expected quarter of a percentage point and projected its policy rate would reach a range of 1.75% to 2% by the end of this year and 2.8% next year. The Fed also projected the equivalent of quarter-percentage-point rate increases at each of its six remaining policy meetings this year but that was in line with market expectations for rates.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. However, momentum has been trending higher since the formation of the closing price reversal bottom on March 15.

A trade through .6875 will change the main trend to up, while a move through .6729 will signal a resumption of the downtrend.

The first minor range is .6926 to .6729. The NZD/USD is currently trading on the strong side of its 50% level at .6827, making it support.

The second minor range is .6631 to .6926. Its 50% level at .6778 is potential support.

The short-term range is .6529 to .6926. Its retracement zone at .6727 to .6681 is key support. It could be controlling the near-term direction of the Forex pair.

The main range is .7219 to .6529. Its retracement zone at .6874 to .6955 is the major resistance. It stopped the rally at .6926 on March 7.

Daily Swing Chart Technical Forecast

The direction of the NZD/USD on Thursday is likely to be determined by trader reaction to .6827.

Bullish Scenario

A sustained move over .6828 will indicate the presence of buyers. If this move is able to generate enough upside momentum then look for a surge into the resistance cluster at .6874 to .6875. Taking out .6875 could trigger an acceleration to the upside with the next target .6926, followed by .6955.

Bearish Scenario

A sustained move under .6827 will signal the presence of sellers. If this move generates enough downside momentum then look for a potential acceleration into the 50% level at .6778.

A trade through .6778 will indicate the selling pressure is getting stronger. This could trigger a sharp break into the potential support cluster at .6729 to .6727.