The New Zealand Dollar closed sharply lower on Friday as traders continued to assess the impact of the coronavirus on the global economy. The Kiwi also fell in sympathy with the Australian Dollar and weak factory output data from China.
Traders are now focusing on this week’s Reserve Bank of New Zealand (RBNZ) interest rate and monetary policy decisions. Most traders are saying policymakers will pass on a rate cut at this meeting, but cut later in the year. However, due to the expected economic damage from the coronavirus, the RBNZ may make an earlier than expected cut to head off a potential recession later in the year.
On Friday, the NZD/USD settled at .6463, down 0.0028 or -0.43%.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart. The next potential downside target is the November 25 main bottom at .6395. A move through .6629 will change the main trend to up.
The major range is .6791 to .6204. Its retracement zone at .6498 to .6567 is controlling the longer-term direction of the NZD/USD. Closing below it is helping to generate a downside bias. The zone is also resistance.
The main range is .6204 to .6758. The NZD/USD closed inside its retracement zone at .6481 to .6416. This zone is potential support, but also a potential trigger point for an acceleration to the downside.
Daily Swing Chart Technical Forecast
Based on last week’s price action and the close at .6463, the direction of the NZD/USD on Monday is likely to be determined by trader reaction to a pair of 50% levels at .6481 to .6498.
A sustained move under .6481 will indicate the presence of sellers. This could trigger a break into the Fibonacci level at .6416. Taking out this level could trigger the start of a steep break after triggering stops under bottoms at .6395 and .6322. The primary downside target is the October 1, 2019 main bottom at .6204.
Overtaking .6481 will indicate the presence of buyers. Taking out the 50% level at .6498 will indicate the buying is getting stronger. If this generates enough upside momentum then look for the rally to possibly extend into .6542, followed by .6567.
China’s stock market could open 5 to 10% lower on February 3 so brace yourself for a sharply lower NZD/USD.
This article was originally posted on FX Empire