NZD/USD Forex Technical Analysis – Trader Reaction to .7251 Should Set the Tone

The New Zealand Dollar, a barometer of risk appetite, closed higher on Tuesday, putting it back on track for an eventual test of its April 13, 2018 main top at .7395. The Kiwi may have also been indirectly supported by the sharp rise in the Chinese Yuan.

Earlier in the day, China announced its decision to lift its official Yuan exchange rate by its highest margin since it abandoned a dollar peg in 2005. Chinas central bank set the official Yuan midpoint at 6.4760 per dollar before the market opened, up 1% from the previous fix, the biggest adjustment higher since 2005.

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On Tuesday, the NZD/USD settled at .7252, up 0.0076 or +1.07%.

The Kiwi also recovered from a two day setback as traders made bets for a strong global economic recovery. Investors also looked ahead to two key elections in Georgia, which will determine whether Republicans can hold on to control in the Senate.

Bullish traders are hoping for a Democratic Party victory since this could create an opportunity for a bigger and faster spending package, which would put further pressure on the U.S. Dollar.

[fx-image src=/2021/01/Daily-NZDUSD-1.jpg data-zoom-target=https://responsive.fxempire.com/cdn/n/n/_fxempire_/2021/01/Daily-NZDUSD-1.jpg originalWidth=1920 ratio=1.99]Daily NZD/USDDaily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The uptrend was reaffirmed on Tuesday when buyers took out the previous main top at .7241. A trade through .7153 will change the main trend to down.

[fx-article-ad]Short-Term Outlook

Wednesdays direction is likely to be determined by the outcome of the Georgia runoff elections.

A Democratic victory could trigger a spike to the upside with the next target .7395. A Republican win could trigger a break with .7153 the first downside target. Taking out this level will change the trend to down.

Additionally, due to the prolonged move up in terms of price and time, traders should watch for a potentially bearish closing price reversal top formation. Taking out Tuesdays high at .7260 then turning lower for the session could encourage investors to book profits, increasing the possibility of a near-term change in trend to down.

For a look at all of todays economic events, check out our economic calendar.