NZD/USD Forex Technical Analysis – Strengthens Over .6686, Weakens Under .6580

The New Zealand Dollar posted a solid gain against its U.S. counterpart on Friday despite a report from the U.S. Labor Department that showed the economy added more jobs than expected in April. Traders blamed sluggish wages and a decline in the number of people in the labor force as the reasons behind the weakness in the greenback.

On Friday, the NZD/USD settled at .6645, up 0.0028 or +0.42%.

The rally helped the Kiwi recover some of its loss from earlier in the week that was caused by weaker-than-expected employment data and less-dovish comments from the U.S. Federal Reserve. Traders are also pricing in a 55 percent chance the Reserve Bank of New Zealand (RBNZ) will cut its official cash rate on May 8, down from a 60 percent chance late yesterday.

Daily NZD/USD
Daily NZD/USD

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through .6686 will change the main trend to up. A move through .6424 will signal a resumption of the downtrend.

The main range is .7061 to .6424. Its retracement zone at .6743 to .6818 is resistance.

The minor range is .6424 to .6970. Its retracement zone at .6697 to .6633 is currently being tested. Counter-trend buyers may be trying to establish a support base inside this zone.

Daily Swing Chart Technical Forecast

Based on Friday’s price action and the close at .6645, the direction of the NZD/USD on Monday is likely to be determined by trader reaction to the Fibonacci level at .6633.

Bullish Scenario

A sustained move over .6633 will indicate the presence of counter-trend buyers. This may be short-covering or position-squaring ahead of the RBNZ decision on Wednesday. If the move generates enough upside momentum, then look for a rally into .6686 then .6697. This move will change the trend to up, which could help extend the rally into the major 50% level at .6743.

Bearish Scenario

A sustained move under .6633 will signal the presence of sellers. This could trigger a retest of the last main bottom at .6580. This price is a potential trigger point for an acceleration to the downside with the next major target the October 8, 2018 main bottom at .6424.

This article was originally posted on FX Empire

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