The New Zealand Dollar closed higher last week against the U.S. Dollar. The Kiwi wasn’t strong, but the greenback was weak as traders priced in a potential rate cut by the Fed at its July 31 meeting.
This week, the direction of the New Zealand Dollar will be determined by trader reaction to the U.S. Dollar and the Reserve Bank of New Zealand (RBNZ) interest rate decision and monetary policy statement.
The RBNZ is expected to leave rates unchanged at this meeting, but it’s likely to hint at an August rate cut. Policymakers are also likely to comment on the impact of lower interest rates in Australia and the U.S., which could have an impact on the New Zealand economy.
Last week, the NZD/USD settled at .6588, up 0.0096 or +1.48%.
Weekly Technical Analysis
The main trend is down according to the weekly swing chart. However, momentum has been trending higher since the formation of the weekly closing price reversal bottom at .6481 during the week-ending May 24.
A trade through .6481 will negate the closing price reversal bottom and signal a resumption of the downtrend with main bottoms at .6424 and .6346 the next likely targets.
The minor trend is also down. A trade through .6682 will change the minor trend to up. This will reaffirm the shift in momentum to the upside.
The main range is .6424 to .6970. Its retracement zone at .6633 to .6697 is controlling the longer-term direction of the NZD/USD. This zone is resistance. It stopped the rally three weeks ago at .6682.
The intermediate range is .6939 to .6481. If the minor trend changes to up then its retracement zone at .6710 to .6764 will become the next upside target.
The short-term range is .6481 to .6682. Keep an eye on trader reaction to its 50% level or pivot this week at .6581.
Weekly Technical Forecast
Based on last week’s close at .6588, the direction of the NZD/USD this week is likely to be determined by trader reaction to the support cluster at .6581. This is formed by a combination of an uptrending Gann angle and the short-term pivot.
A sustained move over .6581 will indicate the presence of buyers. If this creates enough upside momentum then look for the rally to possibly extend into the main Fibonacci level at .6633, followed by the downtrending Gann angle at .6659. Since the trend is down, sellers could come in on a test of these levels. However, .6659 is also the trigger point for an acceleration to the upside with a pair of 50% levels at .6697 and .6710 the next likely upside targets.
A sustained move under .6581 will signal the presence of sellers. This could trigger an acceleration to the downside with the next target angle coming in at .6531. This is followed by another uptrending Gann angle at .6506. This is the last potential support angle before the .6487 minor bottom and the .6481 main bottom.
This article was originally posted on FX Empire
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