The New Zealand Dollar posted a two-sided trade on Friday before closing lower. The currency was pressured early in the session on a growing realization that coronavirus will have a far longer impact than the previously hoped for short, sharp shock to the economy.
Helping to fuel an intraday rally were dovish comments from Federal Reserve Chairman Jerome Powell. He said the central bank will “act as appropriate” to support the economy in the face of risks posed by the coronavirus outbreak, though he said the economy remained in solid condition.
On Friday, the NZD/USD settled at .6247, down 0.0060 or -0.95%.
NZD/USD rallied as traders adjusted their short positions as Powell’s comment suggested the central bank could cut interest rates sooner than previously expected in the wake of the coronavirus.
Daily Technical Analysis
The main trend is down according to the daily swing chart. The downtrend was reaffirmed on Friday when sellers took out the October 1, 2019 main bottom at .6204, followed by the July 8, 2009 bottom at .6194. That’s right. The Kiwi hit a level not seen in nearly 11 years.
The minor trend is also down. A trade through .6335 will change the minor trend to up. This will shift momentum to the upside. Another minor top target comes in at .6359.
Short-Term Outlook
After hitting nearly a 10-year low on Friday, the NZD/USD rebounded into a downtrending Gann angle at .6248. Trader reaction to this angle is likely to set the tone on Monday.
A sustained move under this Gann angle will indicate the presence of sellers. If this move is able to generate enough downside momentum then look for a retest of .6204 and .6194.
Taking out .6194 could trigger a steep break into the June 8, 2009 main bottom at .6151.
Overcoming the downtrending Gann angle at .6248 could lead to further short-covering. If this move is able to generate enough upside momentum then look for the rally to possibly extend into the first minor top at .6335, followed by the second minor top at .6359 and a pair of downtrending Gann angles at .6368 and .6379.
Side Notes
We’re looking for heightened volatility on Monday due to the release of potentially bearish Chinese Manufacturing and Non-Manufacturing PMI reports. The data itself indicates weakness, but it’s also old news. Furthermore, Chinese factory activity is starting to become active so we could see a jump in the numbers in March.
This article was originally posted on FX Empire
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https://finance.yahoo.com/news/nzd-usd-forex-technical-analysis-195517784.html
2020-02-29 19:55:00Z
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