The New Zealand Dollar closed slightly lower on Friday after posting a volatile two-sided trade. The Kiwi rose against the U.S. Dollar after the release of the U.S. Non-Farm Payrolls report as traders initially reacted to a disappointing headline number, but gave back those gains as U.S. Treasury yields continued to rise.
On Friday, the NZD/USD settled at .6929, down 0.0001 or -0.02%.
The rally likely ran out of steam when buyers realized rising wage inflation probably keeps the Federal Reserve on track to begin scaling back its massive monthly bond-buying program perhaps as early as November.
The Fed signaled last month that it could start tapering its asset purchases as soon as November. Economists expect that announcement will come at the November 2-3 policy meeting.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart. A trade through .6960 signals a resumption of the downtrend. Taking out .6806 will reaffirm the downtrend.
A move through .7170 will change the main trend to up. This is highly unlikely, but there is room for a normal 50% to 61.8% counter-trend retracement.
On Friday, the NZD/USD closed slightly above a Fibonacci level at .6924, making it support. Minor support is a 50% level at .6921.
On the upside, the nearest resistance is a 50% level at .6988, followed by another 50% level at .7027.
Daily Swing Chart Technical Forecast
The direction of the NZD/USD early Monday is likely to be determined by trader reaction to the long-term Fibonacci level at .6924.
A sustained move over .6924 will indicate the presence of buyers. If this move is able to generate enough upside momentum then look for a quick move into .6930. Overtaking this level could trigger a further rally into the potential resistance cluster at .6982 to .6988. The latter is a potential trigger point for an acceleration to the upside.
A sustained move under .6924 will signal the presence of sellers. The first target is a minor 50% level at .6921. If this level fails as support then look for the selling to possibly extend into the last minor bottom at .6860. This is a potential trigger point for an acceleration to the downside with the August 20 main bottom at .6806 the next major downside target.
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This article was originally posted on FX Empire