NZD/USD Forex Technical Analysis – Holding Steady Under 7-Month High Amid Weaker Greenback

The New Zealand Dollar is edging higher against the U.S. Dollar on Friday as the greenback continues to weaken in reaction to a slew of data that shows that the U.S. economy was slowing down in the wake of multiple hefty interest rate hikes from the Federal Reserve.

At 02:38 GMT, the NZD/USD is trading .6417, up 0.0022 or +0.35%.

US Dollar Data-Dependent

In the U.S. on Thursday, housing starts and building permits dropped and manufacturing activity in the Mid-Atlantic region softened as well in January. The report also showed inflation pressures fell to nearly a 2-1/2 low. However, weekly jobless claims dropped 15,000 to 190,000 for the week-ended Jan. 14. This provided proof of a strong labor market.

NZ Manufacturing Sector Contracts Again

Domestically, New Zealand’s manufacturing sector contracted for the third consecutive month in December, while the negative mindset of manufacturers has picked up pace.

Earlier in the week, New Zealand’s business confidence in the fourth quarter of last year hit its lowest level since 1974 as companies grapple with higher interest rates, cost pressures and soft demand, a private think tank said on Tuesday.

In other news, traders showed little reaction to the announcement by New Zealand Prime Minister Jacinda Ardern on Thursday of her intent to step down in a shock move that rocked the country’s political landscape.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through .6530 will signal a resumption of the uptrend. A move through .6191 will change the main trend to down.

The minor trend is also up. A trade through .6322 will change the minor trend to down. This will shift momentum to the downside.

The nearest resistance is a long-term 50% level at .6467, followed by the June 3 main top at .6576. The closest support is a minor pivot at .6360, followed by a long-term Fibonacci level at .6231.

Daily Swing Chart Technical Forecast

Trader reaction to a minor pivot at .6448 is likely to determine the direction of the NZD/USD on Friday.

Bullish Scenario

A sustained move over .6448 will indicate the presence of buyers. The first target is a long-term 50% level at .6467. Overtaking this level could trigger a surge into the minor top at .6530, followed by the 7-month top at .6576.

Bearish Scenario

A sustained move under .6448 will signal the presence of sellers. The first target is the minor pivot at .6360, followed by a minor bottom at .6322. This is a potential trigger point for an acceleration to the downside with the next major target .6231 to .6185.