NZD/USD Forex Technical Analysis – Strengthens Over .6785, Weakens Under .6761

The New Zealand Dollar rose against the U.S. Dollar on Friday after a December U.S. jobs report missed expectations. The Kiwi strengthened after the Labor Department said non-farm payrolls rose by 199,000 last month, well short of the 400,000 estimate.

On Friday, the NZD/USD settled at .6776, up 0.0028 or +0.42%.

The move by the NZD/USD is not indicative of an impending change in trend. It probably represents profit-taking or short-covering in reaction to the slower headline number. The rest of the report was pretty decent, with the unemployment rate falling to 3.9% against expectations of 4.1% while earnings rose by 0.6%.

The focus now shifts to Wednesday’s U.S. consumer inflation report after the Fed minutes showed last week that futures on the federal funds rate are implying a 90% chance of a hike, up from 80% on January 5.


Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through .6733 will signal a resumption of the downtrend. A move through .6857 will change the main trend to up.

The minor trend is also down. A trade through .6837 will change the minor trend to up. This will shift momentum to the upside.

Short-Term Outlook

The NZD/USD closed on Friday in between a minor Fibonacci level at .6761 and a short-term 50% level at .6785. This area is controlling the short-term direction of the Forex pair.

Bullish Scenario

A sustained move over .6785 will indicate a resumption of the short-covering rally. The first target is .6795. Overcoming this level will indicate the buying is getting stronger with .6837 and .6857 the next potential upside targets.

Bearish Scenario

The inability to overcome .6785 will be the first sign of selling pressure. Crossing to the weak side of .6761 will indicate the selling pressure is getting stronger with .6733 the first next target.

A trade through .6733 could trigger an acceleration to the downside with the main bottom at .6702 the next major target. A failure to hold this level could trigger the start of a steep decline with the November 2, 2020 main bottom at .6589 the next major 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.