The New Zealand Dollar touched an eight-month high of .6703 early Tuesday then turned lower for the session, an earlier indication of a potentially bearish closing price reversal top. The move was triggered by a recovery in the U.S. Dollar ahead of a Federal Reserve meeting and as the U.S. Congress moved closer to settling on the next fiscal stimulus package.
At 06:28 GMT, the NZD/USD is trading .6650, down 0.0035 or -0.52%.
Looking ahead, the Fed begins a two-day meeting on Tuesday with no policy change anticipated when it makes its monetary policy announcement on Wednesday. Meanwhile, the U.S. Congress is under pressure to approve a new fiscal stimulus package before the old one expires on Friday.
In other news, U.S. consumer confidence and manufacturing data are due at 1400 GMT. This will give traders the latest read on progress in the U.S. economic recovery.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart. The uptrend was reaffirmed earlier in the session when buyers took out the previous main top at .6690. The main trend will change to down on a trade through the last swing bottom at .6615.
The minor range is .6615 to .6703. Its 50% level at .6659 is exerting some influence on the direction of the trade today.
The short-term range is .6503 to .6703. If the main trend changes to down then its retracement zone at .6603 to .6579 will become the next downside target.
The intermediate range is .6381 to .6703. Its retracement zone at .6542 to .6504 is controlling the near-term direction of the Forex pair.
Daily Swing Chart Technical Forecast
Based on the early price action, the direction of the NZD/USD on Tuesday will likely be determined by trader reaction to Monday’s close at .6685.
A sustained move under .6685 will indicate the presence of sellers. This will also put the NZD/USD in a position to form a potentially bearish closing price reversal top. If confirmed, this could lead to the start of a 2 to 3 day correction.
Crossing to the weakside of the 50% level at .6659 will indicate the selling is getting stronger with the next target the main bottom at .6615.
A trade through .6615 will change the main trend to down. This could trigger a further break into the retracement zone at .6603 to .6579. Counter-trend buyers could emerge following a test of this zone.
Holding above .6659 will be the first sign of buyers. If this creates enough upside momentum then look for buyers to try to recapture .6685.
Turning higher for the session on a trade through .6685 could lead to a retest of .6703. This is a potential trigger point for a surge into the December 31, 2919 main top at .6756.
For a look at all of today’s economic events, check out our economic calendar.