NZD/USD Forex Technical Analysis – Could Take a Shot at .6328 to .6340 Before Sellers Return

The New Zealand Dollar is trading flat on Thursday amid pressure on the Reserve Bank of New Zealand (RBNZ) to cut its official cash rate after the Reserve Bank of Australia (RBA) trimmed rates on Tuesday and the U.S. Federal Reserve – in an emergency measure not used since the Global Financial Crisis – cut it fed funds rate by half a percentage point in response to the coronavirus outbreak.

At 03:38 GMT, the NZD/USD is trading .6297, down 0.0009 or -0.01%.

On Tuesday, the RBA cut its official interest rate by a quarter of a percentage point to 0.5 percent, saying the coronavirus outbreak was having a significant effect on the economy. The Fed made its cut despite a strong economy, saying, “However the coronavirus poses evolving risks to economic activity.” It said. Reserve Bank Governor Adrian Orr is set to deliver the next review of the official cash rate (OCR) on March 25.

Daily Technical Analysis

The main trend is down according to the daily swing chart. A trade through .6192 will signal a resumption of the downtrend. The main trend will change to up on a move through .6488. This is highly unlikely but there is room for a 50% to 61.8% retracement of the last break.

A trade through .6335 will change the minor trend to up. This will also shift momentum to the upside.

On the downside, support is a series of former bottoms at .6204, .6194 and .6151.

The short-term range is .6488 to .6192. Its retracement zone at .6340 to .6375 is the primary upside target.

The minor range is .6335 to .6192. Its 50% level or pivot at .6263 is controlling the short-term direction of the NZD/USD.

Daily Technical Forecast

Based on the early price action and the current price at .6297, the direction of the NZD/USD on Monday is likely to be determined by trader reaction to the short-term pivot at .6263.

Bullish Scenario

A sustained move over .6263 will indicate the presence of buyers. If this move creates enough upside momentum then look for the rally to possibly extend into a pair of downtrending Gann angles at .6328 and .6339, followed closely by a 50% level at .6340. Since the main trend is down, look for sellers to arrive on a test of these levels. Taking out .6340 could trigger an acceleration to the upside with .6375 the next upside target.

Bearish Scenario

A sustained move under the pivot at .6263 will signal the presence of sellers. If this move creates enough downside momentum then look for the selling to possibly extend into the minor bottom and multi-year low at .6192.