NZD/USD Weakens Under .6937, Strengthens Over .6955

The New Zealand Dollar is trading higher early Monday. Momentum is being driven by stronger commodity prices and higher yields.

At 08:40 GMT, the NZD/USD is trading .6935, up 0.0018 or +0.25%.

The trade is a little tentative ahead of Tuesday’s Reserve Bank of Australia (RBA) monetary policy and interest rate decisions. The RBA is expected to sound less-dovish towards market expectations. This could underpin the New Zealand Dollar, while supporting the case for additional rate hikes by the Reserve Bank of New Zealand (RBNZ).

In other news, the Kiwi is showing little response to Friday’s strong U.S. Non-Farm Payrolls report. Although the headline number missed the forecast, the unemployment rate hitting a two-year low of 3.6% in March likely means the labor market is strong enough to encourage the Federal Reserve to tackle inflation by lifting rates more aggressively.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through .6876 will change the main trend to down. A move through .6999 will signal a resumption of the uptrend.

The NZD/USD is currently trading inside a long-term retracement zone at .6874 to .6955. Inside this zone is a minor pivot at .6938.

On the downside, short-term support is a retracement zone at .6764 to .6708.

Daily Swing Chart Technical Forecast

The direction of the NZD/USD on Monday is likely to be determined by trader reaction to .6938 and .6955.

Bearish Scenario

A sustained move under .6937 will indicate the presence of sellers. If this move is able to generate enough downside momentum then look for a break into its support cluster at .6876 – .6874. The latter is a potential trigger point for an acceleration to the downside.

Bullish Scenario

A sustained move over .6955 will signal the presence of buyers. If this move creates enough upside momentum then look for a surge into the main top at .6999. This is a potential trigger point for an acceleration to the upside with a pair of November main tops at .7053 – .7081 the next likely targets.