NZD/USD Strengthens Over .6956, Weakens Under .6926

The New Zealand Dollar is trading lower on Monday, pressured by an overnight surge in U.S. Treasury yields, a stronger U.S. Dollar and worries that the relatively high currency could weigh on economic growth.

Some traders are also saying that China’s current COVID-19 lockdowns could weigh on commodity prices, which would weaken demand for the commodity-linked Kiwi.

At 07:26 GMT, the NZD/USD is trading .6942, down 0.0015 or -0.22%.

The benchmark U.S. 10-year Treasury yield hit a multi-year high of 2.557% early Monday, making the U.S. Dollar a more attractive asset.

In other news, China’s financial hub of Shanghai launched a two-stage lockdown of its 26 million people on Monday, closing bridges and tunnels, and restricting highway traffic in a scramble to contain surging COVID-19 cases. The move is being called the biggest COVID-related disruption to hit the city.

Although the Chinese government is trying to minimize the effect of the lockdowns, New Zealand Dollar traders fear that a prolonged shutdown could have an impact on demand for commodities like crude oil as well as threaten to derail the global economy.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through .6989 will signal a resumption of the uptrend. A move through .6729 will change the main trend to down.

The minor trend is also up. A trade through .6865 will change the minor trend to down. This will shift momentum to the downside.

On the upside, the resistance is the long-term Fibonacci level at .6955.

On the downside, the first support is a minor pivot at .6927. This is followed by the long-term 50% level at .6874, followed closely by another minor pivot at .6859.

Daily Swing Chart Technical Forecast

The direction of the NZD/USD on Monday is likely to be determined by trader reaction to .6955.

Bullish Scenario

A sustained move over .6955 will indicate the presence of buyers. This could trigger a surge into the minor top at .6989.

Taking out .6989 will signal a resumption of the uptrend and could trigger an acceleration into a pair of main tops at .7053 and .7081.

Bearish Scenario

A sustained move under .6955 will signal the presence of sellers. The first target is the minor pivot at .6927. This is a potential trigger point for an acceleration into a pair of 50% levels at .6974 to .6859.