The New Zealand Dollar is edging higher early Wednesday after posting a steep plunge the previous session. The catalyst behind the selling pressure was an employment report that indicated a sluggish economy that could prompt the Reserve Bank to cut interest rates further at its policy meeting on November 13. New Zealand unemployment increased more than expected in the third quarter and employment growth slowed.
At 03:48 GMT the NZD/USD is trading .6374, up 0.0001 or -0.02%.
The jobless rate rose to 4.2% from 3.9% in the second quarter, Statistics New Zealand said Wednesday in Wellington. Traders were looking for an increase to 4.1%. Employment gained 0.2% from the previous three months and 0.9% from the year-earlier quarter – the slowest annual pace since 2013.
Look for heightened volatility as we approach the Reserve Bank of New Zealand policy meeting with the majority of economists expecting the RBNZ to cut rates, but traders not so sure.
Daily Technical Analysis
The main trend is up according to the daily swing chart. However, momentum has been trending lower since the closing price reversal top at .6466 on November 4.
A trade through .6466 will negate the closing price reversal top and signal a resumption of the uptrend. The main trend will change to down on a move through .6333.
The short-term range is .6333 to .6466. Its 50% level or pivot at .6400 is the nearest upside target.
The intermediate range is .6241 to .6466. Its 50% level or pivot at .6353 is the nearest downside target. Since the main trend is up, buyers could come in on the first test of this level.
The main range is .6204 to .6466. Its retracement zone at .6335 to .6304 is the primary downside target.
Daily Technical Forecast
Based on the early price action and the current price at .6374, the direction of the NZD/USD the rest of the session on Wednesday is likely to be determined by trader reaction to the steep downtrending Gann angle at .6386.
A sustained move under .6386 will indicate the presence of sellers. This could trigger a quick break into the 50% level at .6353. If this fails as support then look for the selling to possibly extend into the support cluster at .6335 to .6333. A trade through .6333 will change the main trend to down.
Overtaking and sustaining a rally over .6386 will signal the presence of buyers. This could create a labored rally with targets coming in at .6391 and .6400. Overcoming .6400 could trigger a surge to the upside with the next target angle coming in at .6426.
This article was originally posted on FX Empire
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