The New Zealand Dollar is trading slightly better on Wednesday despite warnings by the Reserve Bank of a weakening economy. Earlier in the session, the RBNZ left the official cash rate (OCR) unchanged at 1.5 percent as expected, but the monetary policy committee (MPC) said a further help from interest rates to boost the economy “was likely to be necessary.” The MPC did discuss cutting interest rates this month, but opted to delay the move. Given the dovish language of the monetary policy statement, the bank is now expected to cut interest rates in August.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="At 05:41 GMT, the NZD/USD is trading .6656, up 17 or +0.23%.” data-reactid=”12″>At 05:41 GMT, the NZD/USD is trading .6656, up 17 or +0.23%.
Daily Technical Analysis
The main trend is down according to the daily swing chart, but momentum is trending higher. A trade through .6682 will change the main trend to up. Don’t expect too much of a breakout, however, since there is potential resistance at the April 30 top at .6686 and a 50% level at .6710.
A move through .6487 will signal a resumption of the downtrend. This is highly unlikely today, but the eight day rally puts the NZD/USD inside the window of time for a closing price reversal top.
The main range is .6939 to .6481. Its retracement zone at .6710 to .6746 is major resistance.
The short-term range is .6481 to .6682. Its retracement zone at .6581 to .6558 is the next support area.
Daily Technical Forecast
Based on the early price action, the direction of the NZD/USD on Wednesday is likely to be determined by trader reaction to a pair of Gann angles at .6650 and .6647.
A sustained move over .6650 will indicate the presence of buyers. If this move is able to generate enough upside momentum then look for the rally to possibly extend into the main tops at .6682 and .6686.
A sustained move under .6647 will signal the presence of sellers. The daily chart is wide open to the downside under this angle with the next target angle coming in at .6617. Look for the selling to extend if this angle is taken out.
Given the prolonged move up in terms of price and time, traders should also watch the reaction at .6640. Taking out this level will put the NZD/USD in a position to form a potentially bearish closing price reversal top. If confirmed, this could trigger a 2 to 3 day correction.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="This article was originally posted on FX Empire” data-reactid=”37″>This article was originally posted on FX Empire
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