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NZD/USD Forex Technical Analysis – Supported by Expectations Fed Will Shift to 25bps Rate Hikes in February

The New Zealand Dollar is edging higher on Monday as investors continued to bet the U.S. Federal Reserve will slow the size and pace of its interest rate hikes at its Jan. 31-Feb. 1 policy meeting. This would weaken the U.S. Dollar, while lifting commodity-linked currencies like the Kiwi.

Supporting this view is December’s CPI report, released last Thursday, which showed prices declined 0.1% over November. While prices rose at a 6.5% pace compared to the previous year.

Additionally, on Friday, economic data from the University of Michigan’s consumer sentiment survey showed the one-year inflation outlook down to 4%. This was the third straight monthly decrease and the lowest level since April 2021.

At 01:58 GMT, the NZD/USD is trading .6408, up 0.0024 or +0.37%.

Strategists at Goldman Sachs also supported the notion of a less-hawkish Federal Reserve. They said the December inflation data likely sealed the deal on a shift to 25 basis points hikes in February but cautioned it was too early in the process for central banks to feel comfortable declaring victory.

Daily NZD/USD

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through .6417 will signal a resumption of the uptrend. A move through .6191 will change the main trend to down.

The minor trend is also up. A trade through .6322 will change the minor trend to down. This will also shift momentum to the downside.

The nearest support is a minor pivot at .6372. The closest resistance is a long-term 50% level at .6467.

Daily Swing Chart Technical Forecast

Trader reaction to the minor pivot at .6372 is likely to determine the direction of the NZD/USD on Monday.

Bullish Scenario

A sustained move over .6373 will indicate the presence of buyers. Taking out .6417 will reestablish the uptrend with the long-term 50% level at .6467 the next target. Overtaking this level will put the Kiwi in a position to challenge the main top at .6514.

Bearish Scenario

A sustained move under .6372 will signal the presence of sellers. The first target is the minor bottom at .6322. Taking out this level will indicate the selling is getting stronger. This could trigger an acceleration into the long-term Fibonacci level at .6231. This is the last support before the .6191 main bottom.

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