NZD/USD Forex Technical Analysis – Trader Reaction to .6964 Pivot Sets the Tone; Could Surge Through .7010

The New Zealand Dollar is edging higher against the U.S. Dollar shortly before the release of the Reserve Bank’s (RBNZ) Rate Statement and Official Cash Rate decision at 02:00 GMT.

In its monetary policy review, the RBNZ is expected to leave policy unchanged and hold the official cash rate at a record low of 0.25%, but could start to raise rates later this year, according to a Reuters poll, following recent data that showed rising inflationary pressures and a tightening labor market.

At 01:22 GMT, the NZD/USD is trading .6962, up 0.0016 or +0.23%.

On Tuesday, the NZD/USD plunged after data showed U.S. inflation data for June coming in hotter than expected, raising the prospect that inflationary concerns are set to linger. U.S. consumer prices rose by the most in 13 years in June amid supply constraints and a continued rebound in the costs of travel-related services from pandemic-depressed levels as the economic recovery gathered momentum.

Later on Wednesday, Kiwi investors will get the opportunity to react to a report on U.S. producer price inflation, testimony from Federal Reserve Chair Jerome Powell and the Fed’s Beige Book.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through .6917 will signal a resumption of the downtrend. A move through .7010 will change the main trend to up.

The minor range is .7010 to .6917. The NZD/USD is currently trading on the weak side of its pivot at .6964.

On the downside, the nearest support is the long-term Fibonacci level at .6923, followed by the November 23, 2020 main bottom at .6897. The latter is a potential trigger point for an acceleration into the November 13, 2020 main bottom at .6811.

On the upside, resistance is the long-term 50% level at .7027, followed by a short-term 50% level at .7081.

Daily Swing Chart Technical Forecast

The direction of the NZD/USD on Wednesday is likely to be determined by trader reaction to the minor pivot at .6964.

Bullish Scenario

A sustained move over .6964 will indicate the presence of buyers. If this move creates enough upside momentum then look for a surge into .7010, followed by .7027. The latter is a potential trigger point for an acceleration into .7081, followed by .7117.

Bearish Scenario

A sustained move under .6963 will signal the presence of sellers. This could trigger a break into the Fibonacci level at .6923, followed by yesterday’s low at .6917. If the latter fails then look for a move into .6897.

Taking out .6897 could trigger an acceleration into .6811 over the near-term.