The New Zealand Dollar is trading higher against the U.S. Dollar on signs tight funding conditions are easing slightly after the U.S. Federal Reserve pulled out all stops to supply much needed greenback liquidity.
The Fed announced unlimited quantitative easing and programs to support credit markets on Monday in an unprecedented bid to backstop an economy reeling from emergency restrictions on commerce to fight the coronavirus.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="At 05:15 GMT, the NZD/USD is trading .5789, up 0.0090 or +1.57%.” data-reactid=”14″>At 05:15 GMT, the NZD/USD is trading .5789, up 0.0090 or +1.57%.
In addition to the aggressive move by the Fed, New Zealand’s government announced guarantees to banks to lend to small to medium-sized businesses.
Daily Technical Analysis
The main trend is down according to the daily swing chart. A trade through .5469 will signal a resumption of the downtrend. The main trend will change to up on a trade through .6448.
The short-term range is .6448 to .5469. Its retracement zone at .5959 to .6074 is the primary upside target. Inside this zone is a downtrending Gann angle at .6008. This makes it a valid upside target also.
Daily Technical Forecast
Based on the early price action and the current price at .5789, the direction of the NZD/USD the rest of the session on Tuesday is likely to be determined by trader reaction to the steep downtrending Gann angle at .5568.
A sustained move over .5568 will indicate the presence of buyers. If this generates enough upside momentum then look for the rally to possibly extend into the short-term 50% level at .5959, followed by the downtrending Gann angle at .6008.
Since the main trend is down, we’re looking for sellers to come in on a test of .5959 to .6008. They are going to try to establish a secondary lower top. Meanwhile, taking out the upper or Fibonacci level at .6074 will indicate the buying is getting stronger.
Falling back below and sustaining a move under .5568 will signal the return of sellers. This could trigger a retest of .5469.
We could be looking at the early stages of a recovery as traders unwind their bearish positions placed in response to the huge demand for the highly liquid U.S. Dollar.
<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=”39″>This article was originally posted on FX Empire
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