NZD/USD Forex Technical Analysis – Strengthens Over .7171, Weakens Under .7112

The New Zealand Dollar fell on Friday from a 2-1/2 year high as the U.S. Dollar firmed on doubts about an agreement on U.S. COVID-19 aid and Brexit trade negotiations deflated investor confidence.

The U.S. Congress looked increasingly unlikely on Friday to meet a deadline to agree on $900 billion in fresh COVID-19 aid and instead may pass a third stopgap spending bill to keep the government from shutting down at midnight.

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On Friday, the NZD/USD settled at .7141, down 0.0012 or -0.16%.

The European Union, also on Friday, said there were just hours left to strike a Brexit trade deal while Britain called on the bloc to see sense as the two sides race to prevent a turbulent finale to the Brexit crisis at the end of the month.

[fx-image src=/2020/12/Daily-NZDUSD-7.jpg data-zoom-target=https://responsive.fxempire.com/cdn/n/n/_fxempire_/2020/12/Daily-NZDUSD-7.jpg originalWidth=1920 ratio=1.99]Daily NZD/USDDaily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, a trade through .7171 will signal a resumption of the uptrend. The main trend will change to down on a move through .7054.

The minor range is .7054 to .7171. Its 50% level at .7112 is minor support. This level stopped the selling on Friday.

The short-term range is .7006 to .7171. Its 50% level at .7088 is the last potential support before the .7054 main bottom.

[fx-article-ad]Daily Swing Chart Technical Forecast

The NZD/USD posted an inside move on Friday. This tends to indicate investor indecision and impending volatility. It also is often the first sign of a transition in momentum. In this case, the next move will be determined by investor sentiment.

Worries over COVID-19 financial relief could drive stocks lower, which would increase demand for the safe-haven U.S. Dollar. This will put pressure on the New Zealand Dollar especially if Brexit negotiations continue to drag on.

The early outlook for Monday suggests a bullish tone could develop on a sustained move over .7171, while a bearish tone could develop on a sustained move under the first pivot at .7112.

The downside is most interesting because if .7112 fails, the next target is the pivot at .7088. And if this level fails then look for a test of the main bottom at .7054.

Taking out .7054 will change the main trend to down on the daily chart. This could trigger an acceleration to the downside. Bullish trend traders could be waiting for any valid reason to book profits and a move through .7054 could be it.

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