NZD/USD Technical Analysis
The New Zealand Dollar edged higher on Monday as investors continued to bet that the US Federal Reserve will scale back the size and pace of its interest rate hikes at its policy meeting on January 31-February 1. This would weaken the US dollar while strengthening commodity-linked currencies such as the New Zealand dollar.
This viewpoint is supported by the December CPI report, which showed that prices fell 0.1% over November. In comparison to the previous year, prices increased at a 6.5% annual rate.
Furthermore, economic data from the University of Michigan's consumer sentiment survey showed that the one-year inflation outlook had dropped to 4% on Friday. This was the third consecutive monthly decline and the lowest level since April 20, 2021.
The NZD/USD is trading at.6408, up 0.0024 or +0.37% at 01:58 GMT.
Goldman Sachs strategists agreed with the idea of a less hawkish Federal Reserve. They believe the December inflation data sealed the deal on a shift to 25 basis point hikes in February, but they caution that it is too early in the process for central banks to declare victory.
Daily Swing Chart Technical Analysis
According to the daily swing chart, the main trend is up. A trade through.6417 will signal the resumption of the uptrend. A break of.6191 shifts the main trend to the downside.
The minor trend is also upward. A trade through.6322 shifts the minor trend to the downside. This will also shift momentum to the downside.
The nearest support is a minor pivot at.6372. The nearest resistance is a long-term 50% level at.6467.
Daily Swing Chart Technical Forecast
The reaction of traders to the minor pivot at.6372 will most likely determine the direction of the NZD/USD on Monday.
Bullish Scenario
A sustained move above.6373 signals the presence of buyers. Taking out.6417 restores the uptrend, with the long-term 50% level at.6467 as the next target. By passing this level, the Kiwi will be in a position to challenge the main top at.6514.
Bearish Hypothesis
A sustained move below.6372 indicates the presence of sellers. The minor bottom at.6322 is the first target. If this level is breached, it indicates that the selling is intensifying. This could cause a surge to the long-term Fibonacci level of.6231. This is the last support before the main bottom at.6191.