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Soft Inflation Data in New Zealand Pressures the NZD

The CPI for New Zealand in the April-June quarter (Q2) came in flat, at 0.0%, missing the already low forecast of 0.2%. With the soft inflation data, the market sold the New Zealand Dollar (NZD). The AUD/NZD for example pushed higher around and immediately after the release of the inflation data (AUD gained against the NZD). 

AUD/NZD 1H Chart

(click to enlarge)

Bull Run:
- In the very short-term, we can see that AUD/NZD has been rallying since last week.
- The 1H chart is a picture of a bullish trend that accelerated against after the weak inflation data, pushing AUD/NZD above 1.07.
- However, we should anticipate resistance as soon as 1,0770-1.08.
Resistance:
- As we can see on the daily chart, price has rallied from a low around 1.04 in June to above 1.07. 
- However, as price approaches the 1.0770-1.08 area, it will be challenged by a falling trendline and a previous resistance pivot.
- The RSI is already hitting 70 and therefore almost in overbought territory. Because AUD/NZD is sideways, overbought readings should be respected.
- Now if price does retreat, our bearish outlook should be limited as well, with the 1.0550 level as the most aggressive outlook. 
- The 1.06 area is probably a better level to anticipate support since price action has been bullish since the start of July and might still be bullish in the medium-term. 
- Now, if price breaks above 1.08, AUD/NZD would have the 1.10 mark in sight.

AUD/NZD Daily Chart

(click to enlarge)