NZD/USD Forex Technical Analysis – Trader Reaction to .6981 Pivot Sets the Tone

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The New Zealand Dollar is trading lower but off its low on Monday as investors shed riskier currencies while moving money into perceived safe-haven assets. Investor risk appetite is being soured by fears of rising inflation and a relentless surge in coronavirus cases.

Global economic growth is beginning to show signs of fatigue while many countries, particularly Asia, are struggling to curb the highly contagious Delta variant of the coronavirus and have been forced into some form of lockdown. The specter of elevated inflation, which the market has long feared, is also haunting investors.

At 05:46 GMT, the NZD/USD is trading .6993, down 0.0010 or -0.15%.

The NZD/USD is faring better than its Australian counterpart, which hit its lowest level since early December. Last week, a report showed New Zealand inflation surged in the second quarter, breaching the central bank’s target range for the first time in 10 years and fueling bets it will start raising interest rates as soon as next month. This may be helping to provide support on Monday.


Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through .6918 will signal a resumption of the downtrend. A trade through .7105 will change the main trend to up.

The NZD/USD is currently trading inside a long-term retracement zone at .7027 to .6924. This zone has held as support since June 18.

The minor range is .6918 to .7045. Its 50% level or pivot at .6982 falls inside the long-term retracement zone. It has provided support the past three sessions.

The short-term range is .7243 to .6918. Its 50% level at .7081 is the first potential resistance target.

Daily Swing Chart Technical Forecast

The direction of the NZD/USD on Monday will be determined by trader reaction to the minor pivot at .6982.

Bullish Scenario

A sustained move over .6982 will indicate the presence of buyers. If this creates enough upside momentum then look for the rally to possibly extend into the main 50% level at .7027, followed by last week’s high at .7045.

Bearish Scenario

A sustained move under .6982 will signal the presence of sellers. The daily chart indicates there is plenty of room under this level with .6924 the first downside target, followed by .6918 and the November 23, 2020 main bottom at .6897.