The New Zealand Dollar is trading lower early Wednesday as investors shrugged off a widely expected rate hike by the Reserve Bank (RBNZ), choosing instead to focus on Friday’s U.S. Non-Farm Payrolls report that could offer clues on the timing of Federal Reserve policy tightening.
At 05:44 GMT, the NZD/USD is trading .6924, down 0.0035 or -0.50%.
The Reserve Bank of New Zealand (RBNZ) lifted its official cash rate for the first time in seven years, but the well-telegraphed hike was expected. Policymakers also signaled further tightening to come, as it looks to get on top of inflationary pressures and cool a red-hot housing market.
On Wednesday, traders will have the opportunity to react to the latest ADP Non-Farm Employment Change report at 12:15 GMT. It is expected to show the private sector of the economy added 425,000 jobs.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart. A trade through .6860 will signal a resumption of the downtrend. A move through .7157 will change the main trend to up.
The NZD/USD is currently testing Fibonacci support at .6924. This is followed by a minor 50% level at .6921.
On the upside, the nearest resistance is a pair of 50% levels at .6988 and .7027.
Daily Swing Chart Technical Forecast
The direction of the NZD/USD on Wednesday is likely to be determined by trader reaction to the main Fibonacci level at .6924 and the minor 50% level at .6921.
A sustained move over .6924 will indicate the presence of buyers. If this move is able to generate enough upside momentum then look for a possible run into .6982 to .6988.
A sustained move under .6921 will signal the presence of sellers. The first downside target is .6907. If this level fails then look for a possible acceleration to the downside with .6860 the next likely target.
Side Notes: Volume seems to be coming in below average so be careful buying strength and selling weakness. We could see whipsaw action as traders position themselves ahead of today’s ADP report and Friday’s NFP report.