Kiwi Buyers Defending Short-Term Support Zone

The New Zealand Dollar is struggling to get its footing on Monday as the U.S. Dollar clung to a late week bounce as investors braced for January’s U.S. Federal Reserve meeting and raised bets it will chart a year ahead by announcing several rate hikes. Volume is tight, however, with the U.S. on a bank holiday.

At 12:10 GMT, the NZD/USD is trading .6808, down 0.0004 or -0.05%.

The move by the Kiwi follows the dollar’s jump on Friday along with U.S. yields and underscore support for the greenback from the hawkish rates outlook, even if momentum for gains has started to wane.

The Fed meets January 25-26 and is not expected to move rates, but there is a growing drumbeat of hawkish comments coming from within and outside the central bank.

The cash Treasury market was closed for a holiday on Monday but 10-year futures were sold to a two-year low and Fed funds futures also fell, reflecting a strengthening conviction in the market of a least four hikes in 2022.


Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through .6891 will signal a resumption of the uptrend. A move through .6733 will change the main trend to down.

The short-term range is .6702 to .6891. The NZD/USD is currently testing its retracement zone at .6797 to .6774.

The minor range is .7053 to .6702. Its 50% level at .6878 is resistance. This level stopped the rally last Thursday.

The main range is .7219 to .6702. If the uptrend resumes then its retracement zone at .6961 to .7022 will become the next upside target area.

Short-Term Outlook

The direction of the NZD/USD over the short-run will be determined by trader reaction to .6797 to .6774. Since the main trend is up, buyers are defending this zone. They are trying to form a potentially bullish secondary higher bottom.

Bullish Scenario

A sustained move over .6797 will indicate the presence of buyers. The first upside target is a minor pivot at .6839. Overcoming this level could trigger an acceleration into .6878 to .6891.

Bearish Scenario

A sustained move under .6774 will signal the presence of sellers. This could trigger a break into the main bottom at .6733. Taking out this level will change the main trend to down with .6702 the next target.

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Published by

James Hyerczyk

James A. Hyerczyk has worked as a fundamental and technical financial market analyst since 1982. His technical work features the pattern, price and time analysis techniques of W.D. Gann.