Yahoo Finance NZD/USD Forex Technical Analysis – In Position to Challenge Retracement Zone at .6710 to .6764
The New Zealand Dollar finished higher on Friday as a weaker-than-expected U.S. Non-Farm Payrolls report helped raise the chances of a sooner-than-expected rate cut by the U.S. Federal Reserve. As the odds of the rate cut increased, the 10-year U.S. Treasury yield plunged, making the U.S. Dollar a less-attractive asset.
On Friday, the U.S. Labor Department reported that U.S. Non-Farm Payrolls for May rose just 75,000, versus an estimate of 180,000. This was the second time in four months that payrolls increased by less than 100,000 as the labor market continues to show signs of reaching maximum employment and weaker-month-over-month gains.
The news also drove market expectations for a rate cut in June to 27.5% from 16.7%, according to the CME Group’s Fed Watch tool. The chance of lower Fed rates by July is now 79%.
The NZD/USD settled on Friday at .6664, up 0.0042 or +0.63%.
Daily Technical Analysis
The main trend is up according to the daily swing chart. The next upside target is the April 30 main top at .6686. Taking out this level will reaffirm the uptrend. The main trend will change to down on a trade through .6495. This is highly unlikely over the short-run. However, due to the prolonged move up in terms of price and time from the .6481 main bottom, the NZD/USD will begin Monday’s session inside the window of time for a closing price reversal top.
The main range is .6939 to .6481. Its retracement zone at .6710 to .6764 is the primary upside target. Even though the trend is up, aggressive counter-trend sellers could come in on the first test of this zone. It is controlling the near-term term direction of the Forex pair. Some longs could decide to book profits on a test of this zone. New short-sellers may try to form a secondary lower top.
Daily Technical Forecast
Based on Friday’s price action and the close at .6664, the direction of the NZD/USD on Monday is likely to be determined by trader reaction to the downtrending Gann angle at .6634.
Bullish Scenario
A sustained move over .6634 will indicate the presence of buyers. The next targets are an uptrending Gann angle at .6701 and the main 50% level at .6710. Look for sellers on the first test of this level.
Overcoming .6710 will indicate the buying is getting stronger. If this creates enough upside momentum then look for the rally to possibly extend into the Fibonacci level at .6764.
Bearish Scenario
A sustained move under .6634 will signal the presence of sellers. If this move is able to generate enough downside momentum then look for the selling to possibly extend into the uptrending Gann angle at .6591. Since the main trend is up, buyers could come in on the first test of this angle. If it fails then look for the selling to get stronger.
This article was originally posted on FX Empire
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