The New Zealand Dollar is edging higher in a choppy trade early Thursday. Traders are monitoring U.S.-China trade relations because an escalation of the tensions could derail the current rally amid increased demand for the U.S. Dollar.
Appetite for riskier assets has improved greatly this week as progress in developing vaccines for the novel coronavirus reduced the U.S. Dollar’s safe-harbor appeal. The greenback is being further pressured by expectations of a massive amount of fiscal spending to support the U.S. economy.
At 06:25 GMT, the NZD/USD is trading .6683, up 0.0021 or +0.31%.
On Thursday, traders will have the opportunity to react to a report on U.S. Weekly Unemployment Claims. They want to see if the surge in coronavirus cases is having an impact on the U.S. labor market.
Early Friday, the focus will be on the New Zealand Trade Balance report. It is supposed to shrink from 1253M to 450M.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart. A trade through .6690 will signal a resumption of the uptrend.
The main trend will change to down on a move through .6503. This is highly unlikely, however, today is the seventh day up from the last main bottom, which puts the NZD/USD inside the window of time for a potentially bearish closing price reversal top.
The current moving minor range is .6503 to .6690. Its retracement zone at .6596 to .6574 is potential support. This zone will move up as the Forex pair moves higher.
Daily Swing Chart Technical Forecast
Given the prolonged move up in terms of price and time, the direction of the NZD/USD the rest of the session on Thursday is likely to be determined by trader reaction to .6662.
A sustained move over .6662 will indicate the presence of buyers. Taking out the .6690 high will indicate the buying is getting stronger. If this is able to generate enough upside momentum then we could see a further surge into a pair of multi-year tops at .6758 and .6791.
A sustained move under .6662 will signal the presence of sellers. This will also indicate the selling is greater than the buying at current price levels.
A close under this level will form a closing price reversal top. If confirmed, this could trigger a 2 to 3 day correction into at least .6596 to .6574.