NZD/USD Forex Technical Analysis – Weakens Under .6997, Strengthens Over .7040

The New Zealand Dollar is trading lower on Friday after touching its lowest level since October 14 earlier in the session. This puts the currency in a position to post a loss for the second consecutive week.

The kiwi is being pressured by the prospect of earlier rate hikes in the United States after the October U.S. consumer inflation report showed a steep rise in consumer prices.

Technical factors have also contributed to the losses with previous support levels failing due to have selling pressure and profit-taking after its recent run-up. Additionally, the currency is being undermined by concerns about a slowdown in China, their biggest export market, and a pullback in key resource prices, notably iron ore.

At 06:22 GMT, the NZD/USD is trading .7016, down 0.0005 or -0.08%.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, but momentum has been trending lower since the formation of the closing price reversal top on October 21.

A trade through .7219 will signal a resumption of the uptrend. A move through .6860 will change the main trend to down.

The main range is .6860 to .7219. The NZD/USD is currently testing its retracement zone at .7040 to .6997.

The new minor range is .7219 to .6997. Its 50% level or pivot at .7108 is potential resistance. This level will move down as the Kiwi moves lower.

Daily Swing Chart Technical Forecast

The direction of the NZD/USD on Friday will be determined by trader reaction to .6997.

Bearish Scenario

A sustained move under .6997 will indicate the presence of sellers. This could trigger an acceleration to the downside since the next major support doesn’t come in until .6860.

Bullish Scenario

A sustained move over .6997 will signal the presence of buyers. This could trigger a surge into the 50% level at .7040.

A rally through .7040 will indicate the presence of buyers. If this move is able to generate enough upside momentum, we could see a short-term rally into the pivot at .7108. Since the main trend is down, sellers could come in on a test of this level.