NZD/USD: Testing Important Fibonacci Support at .6722

The New Zealand Dollar is down sharply on Monday as investors took advantage of thin trading conditions due to an extended Easter bank holiday. But the biggest influence on the currency was the stronger U.S. Dollar.

In other news, traders showed little response to mixed-to-positive economic news out of China. Traders are also expressing some concern over the extended COVID-related lockdown in China.

At 08:27 GMT, the NZD/USD is trading .6735, down 0.0025 or -0.36%.

US Dollar Boosted by Surge in Treasury Yields

The U.S. Dollar is moving higher against its New Zealand counterpart amid another surge in the benchmark 10-year U.S. Treasury yield that rose Monday to a level not seen in more than three years, as traders continued to assess rising inflation.

The yield on the 10-year Treasury note rose 5 basis points to 2.8662%, a level last seen in late 2018. The yield on the 30-year Treasury bond jumped 2 basis points to 2.9424%.

NZD Traders Show Little Reaction to China Economic News While Eyeing COVID Shutdowns

New Zealand Dollar traders showed little reaction to economic reports from China since the data is considered stale. Meanwhile, the focus is on the harsh COVID-related lockdowns in China that could have an impact of future economic data. This could hurt the New Zealand economy since they are major trading partners.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The downtrend was reaffirmed earlier in the session when sellers took out the main bottom at .6729. A trade through .6902 will change the main trend to up.

The NZD/USD is currently testing the lower end of the retracement zone at .6782 to .6722.

Daily Swing Chart Technical Forecast

The direction of the NZD/USD into the close on Monday is likely to be determined by trader reaction to .6760.

Bearish Scenario

A sustained move under .6760 will indicate the presence of sellers. The first major support is the Fibonacci level at .6722. Taking out this level could trigger an acceleration to the downside with the February 24 main bottom at .6631 the next major target.

Bullish Scenario

A sustained move over .6760 will signal the return of buyers. This could lead to a test of the 50% level at .6782. Overtaking this level will indicate the buying is getting stronger. This could trigger an acceleration to the upside into another 50% level at .6833.

Side Notes

Due to the prolonged move down in terms of price and time, a close over .6760 will form a potentially bullish closing price reversal bottom. If confirmed, this could lead to a 2 to 3 day counter-trend rally.