The growth-sensitive New Zealand Dollar hit a 22-month low against the U.S. Dollar in Monday’s early trade as demand for higher risk, higher-yielding assets continued to slide on the heels of a more than 1% drop in U.S. stock index futures.
Although the Reserve Bank of New Zealand (RBNZ) was the first major central bank to raise its benchmark interest rates after the pandemic, the New Zealand Dollar has been hit hard because the Federal Reserve is widely expected to tighten monetary policy faster to stem runaway inflation. Investors chasing yields are flocking into the U.S. Dollar.
At 03:47 GMT, the NZD/USD is trading .6351, down 0.0055 or -0.86%.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart. Earlier today, sellers took out the June 15, 2020 main bottom at .6381, reaffirming the downtrend.
A trade through the intraday low at .6348 will signal a resumption of the downtrend. A move through .6569 will change the main trend to up.
On the upside, the first resistance is a long-term 50% level at .6467. Following this level is a minor pivot at .6500.
Daily Swing Chart Technical Forecast
Trader reaction to .6406 will determine the direction of the NZD/USD early Monday.
Bearish Scenario
A sustained move under .6406 will indicate the presence of sellers. Taking out the intraday low at .6348 will indicate the selling pressure is getting stronger.
The next major downside target is the long-term Fibonacci level at .6231.
Bullish Scenario
A sustained move over .6406 will signal the presence of buyers. Taking out the intraday high at .6412 will indicate the buying is getting stronger. This could trigger an acceleration to the upside with potential targets the long-term 50% level at .6467 and the pivot at .6500.
Side Notes
A close over .6406 will form a potentially bullish closing price reversal bottom. If confirmed, this could trigger the start of a minimum two-day counter-trend rally.
The key level to overcome is the long-term 50% level at .6467. A failure to do so will put the NZD/USD on course for a test of the long-term Fibonacci level at .6231.
For a look at all of today’s economic events, check out our economic calendar.
This article was originally posted on FX Empire
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Source: https://finance.yahoo.com/news/nzd-usd-testing-long-term-042550526.html