The New Zealand Dollar plunged to its lowest level since October 13 after the U.S. Dollar surged following the nomination of Federal Reserve Chair Jerome Powell for a second four-year term by President Joe Biden. Powell’s nomination is being interpreted as a hawkish move, which helped drive up Treasury yields and the U.S. Dollar.
At 21:37 GMT, the NZD/USD is trading .6956, down 0.0041 or -0.58%.
Kiwi traders will have the opportunity to react to the latest data on Retail Sales and Core Retail Sales early Tuesday. The major event this week, however, is Wednesday’s Reserve Bank (RBNZ) interest rate and monetary policy announcements. Traders expect policymakers to raise the Official Cash Rate (OCR) to 0.75% from 0.50% in a widely telegraphed move.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart, however, momentum has been trending lower since the confirmation of the closing price reversal top on October 21.
A trade through .6860 will change the main trend to down. A move through .7219 will negate the closing price reversal top and signal a resumption of the uptrend.
The minor trend is down. This confirms the shift in momentum. A trade through .7053 will change the minor trend to up.
The main range is .6960 to .7219. The NZD/USD is currently trading on the weak side of its retracement zone at .6997 to .7040, making it resistance.
Short-Term Outlook
The direction of the NZD/USD early Tuesday is likely to be determined by trader reaction to .6997.
Bearish Scenario
A sustained move under .6997 will indicate the presence of sellers. Taking out Monday’s low at .6948 will indicate the selling pressure is getting stronger.
There is room for an acceleration to the downside with the next targets a minor bottom at .6877 and a main bottom at .6860.
Bullish Scenario
Overtaking the Fibonacci level at .6997 will indicate the presence of buyers. If this move creates enough upside momentum then look for a surge into .7040.
Since the main trend is down, sellers could come in on a test of .7040. Taking out this level, however, will indicate the buying is getting stronger and could trigger a breakout over the minor top at .7053. This could extend the rally into another minor top at .7081.
The minor top at .7081 is a potential trigger point for an acceleration to the upside.
For a look at all of today’s economic events, check out our economic calendar.
This article was originally posted on FX Empire
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2021-11-22 21:56:21Z
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