NZD/USD Strengthens Over .6607, Weakens Under .6588

The New Zealand Dollar is edging higher early Monday following a steep sell-off the previous session. A successful test of a minor support area combined with a slight increase in demand for riskier assets is helping to give the Kiwi a small boost. Volume is on the light side with New Zealand on a bank holiday.

At 07:04 GMT, the NZD/USD is trading .6628, up 0.0014 or +0.21%.

On Friday, the NZD/USD was on the defensive after a staggeringly strong U.S. payrolls report added to the risk of faster rate hikes there and sent bond markets reeling.

Perhaps keeping a lid on the Forex pair is the news that the markets are now pricing in a one-in-three risk the Federal Reserve could hike by a full 50 basis points in March and have rates approaching 1.5% by year end. The Reserve Bank (RBNZ) is expected to announce a 25 basis point rate hike at its monetary policy meeting on February 23.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through .6891 will change the main trend to up. A move through .6529 will signal a resumption of the downtrend.

The minor trend is also down. A trade through .6684 will change the minor trend to up. This will shift momentum to the upside.

The minor range is .6529 to .6684. Its retracement zone at .6606 to .6588 is support. This area stopped the selling at .6590 on Friday.

On the upside, the nearest resistance is a pivot at .6670. The short-term range is .6891 to .6529. Its retracement zone at .6710 to .6753 is the major resistance area.

Daily Swing Chart Technical Forecast

The direction of the NZD/USD on Monday is likely to be determined by trader reaction to .6607 and .6588.

Bullish Scenario

A sustained move over .6607 will indicate the presence of buyers. If this move generates enough upside momentum then look for a surge into .6670, followed by .6684.

Bearish Scenario

A sustained move under .6588 will signal the presence of sellers. If this move creates enough downside momentum then look for a potential acceleration into the main bottom at .6529.