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NZD/USD Forex Technical Analysis – Trader Reaction to Key 50% Level at .7027 Sets the Tone

The New Zealand Dollar is inching higher on Tuesday as risk appetite in Asia recovered after Wall Street pared losses sparked by a hedge fund default that hit investment banks. Month-end position-squaring also helped underpin prices. The kiwi is on track to shed 3.07% in March, which would be its worst monthly performance and its first quarterly loss in a year.

At 03:17 GMT, the NZD/USD is trading .7016, up 0.0019 or +0.27%.

Investors fretting about the potential fallout from the collapse of Archegos Capital had earlier sought the safe-haven greenback, although those jitters eased as the Asian trading day got underway.

New Zealand government bonds were also lower with yields 7-8 basis points higher at the longer end of the curve.


Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through .6943 will reaffirm the downtrend. A trade through .7270 will change the main trend to up.

The NZD/USD is currently testing the upper-level of the main retracement zone at .7027 to .6924. This zone is controlling the near-term direction of the Forex pair.

The short-term range is .7270 to .6943. Its 50% level at .7107 is the primary upside target. Since the main trend is down, sellers could come in on a test of this level.

Daily Swing Chart Technical Forecast

The direction of the NZD/USD is likely to be determined by trader reaction to .7027.

Bullish Scenario

A sustained move over .7027 will indicate the presence of buyers. If this move creates enough upside momentum then look for a move into .7107. Since the main trend is down, look for sellers on a test of this level. They are going to try to form a potentially bearish secondary lower top.

Bearish Scenario

A sustained move under .7027 will signal the presence of sellers. The first downside target is a pivot at .6989. Aggressive counter-trend buyers could come in on a test of this level. They will be trying to form a potentially bullish secondary higher bottom.

If .6989 fails as support then look for the selling to possibly extend into the main bottom at .6943, followed closely by the main Fibonacci level at .6924.