NZD/USD Forex Technical Analysis – Cooler than Expected PPI Data Will Be Positive News for Kiwi Dollar

The New Zealand Dollar is edging higher on Friday as worries over a slowdown in the U.S. economy weighed on the greenback. The Kiwi is also being bolstered by improving risk sentiment. Nonetheless, traders are being a little cautious about playing the long side ahead of key U.S. producer price inflation (PPI) data on Friday, U.S. consumer price inflation figures next Tuesday and a major Federal Reserve interest rate decision on Dec. 14.

At 06:48 GMT, the NZD/USD is trading .6396, up 0.0017 or +0.26%.

On Thursday, a U.S. report showed the number of Americans filing new claims for jobless benefits increased moderately last week, with the so-called continuing claims rising to a 10-month high in late November, adding to fears that the world’s largest economy may slide into recession next year.

Money markets are pricing in a 93% chance that the Fed will raise rates by 50 basis points, with rates now seen peaking at just below 5% in May.

Expectations that the Fed will scale back the pace of its interest rate hikes and that rates may not rise as high as previously feared along with bets that the Reserve Bank of New Zealand (RBNZ) will hike rates another 75 basis point rate hike, have driven the NZD/USD sharply higher over the past month.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through .6443 will signal a resumption of the uptrend. A move through .6156 will change the main trend to down.

The minor trend is also up. A trade through .6302 will change the minor trend to down. This will shift momentum to the downside.

The minor range is .6443 to .6302. Its pivot comes in at .7372. The nearest resistance is a long-term 50% level at .6467. The closest support is a long-term Fibonacci level at .6231.

Daily Swing Chart Technical Forecast

Trader reaction to the minor pivot at .6372 is likely to determine the direction of the NZD/USD on Friday.

Bullish Scenario

A sustained move over .6373 will indicate the presence of buyers. If this creates enough upside momentum then look for a surge into .6443, followed closely by .6467.

Bearish Scenario

A sustained move under .6373 will signal the presence of sellers. If this generates enough downside pressure then look for a break into the minor bottom at .6302. This is followed by a long-term Fibonacci level at .6231.

Side Notes

Look for heightened volatility with the release of the U.S. PPI report at 15:30 GMT. Traders are looking for a monthly reading of 0.2%. Cooler than expected data will be positive for the NZD/USD.