NZD/USD Fundamental Daily Forecast – Move Through .6569 Changes Main Trend to Up

The New Zealand Dollar is edging higher early Friday on slowly rising demand for riskier assets and a weaker U.S. Dollar. The move is taking place almost two days after minutes from the U.S. Federal Reserve’s May meeting indicated the central bank would remain flexible and might pause rate hikes later in the year, and New Zealand’s central bank raised its Official Cash Rate (OCR).

At 02:44 GMT, the NZD/USD is trading .6509, up 0.0028 or +0.44%.

Key Market Drivers

Wall Street closed higher on Thursday with the three main U.S. indices positioned for their biggest weekly gain since mid-March and to snap their longest losing streaks in decades of weekly declines. This serves as a sign investor sentiment may be turning positive.

Meanwhile, the U.S. Dollar is under pressure on worries the Fed could pause its tightening in September if the economy deteriorates. This is a reaction to Wednesday’s Fed minutes and Thursday’s weak U.S. economic data.

Furthermore, the New Zealand Dollar has been bid since the Reserve Bank (RBNZ) delivered its fifth straight interest rate hike on Wednesday and signaled a much more aggressive tightening path as authorities seek to reduce the second-round effects of runaway inflation.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. However, momentum is trending higher. A trade through .6569 will change the main trend to up. A move through .6217 will change the main trend to down.

The minor trend is up. This is controlling the momentum. A trade through .6291 will change the minor trend to down.

The NZD/USD is currently trading on the strong side of a long-term retracement zone at .6467 to .6231, making it support. The short-term support is a pivot at .6393.

On the upside, the nearest resistance is a pivot at .6560, followed by a retracement zone at .6626 to .6722. This is the primary upside target of this rally.

Daily Swing Chart Technical Forecast

Trader reaction to .6480 is likely to determine the direction of the NZD/USD on Friday.

Bullish Scenario

A sustained move over .6481 will indicate the presence of buyers. Taking out the intraday high at .6516 will indicate the buying is getting stronger. This could create the momentum needed to challenge the 50% level at .6560, followed by the main top at .6569.

A trade through .6569 will change the main trend to up, setting up a possible test of the main retracement zone at .6626 to .6722.

Bearish Scenario

A sustained move under .6480 will signal the presence of sellers. This could lead to a test of the major 50% support at .6467.

Crossing to the bearish side of .6467 will put the NZD/USD in a weak position. This could extend the selling pressure into .6393.