NZD/USD Technicals – Bearish Pullback Possible After CPI Rally

NZD/USD Technicals – Bearish Pullback Possible After CPI Rally

Kiwi dollar rebounded sharply after recent CPI figures were released, showing that the rate inflation in New Zealand has once again exceeded expectations, as the previous quarter. Q4 CPI gained 0.1% compared to the consensus estimate of 0.0%. However, Q4 inflation is the lowest we've seen in the last 4 quarters. Consequently, hedge paris central bank will be more likely to raise rates on January 30 may be a bit optimistic given that the CPI of the previous quarter was 0.9%. In addition, it should be noted that the estimate of analysts consensus was actually quite diverse and ranges from 0.3% all the way to 0.4%. Therefore, it is perhaps more accurate to say that the CPI is in analysts' expectations, and it is likely that the RBNZ will be more comfortable with CPI printing this quarter, although RBNZ never really said they were concerned about inflation to start (key question is actually the housing prices, not inflation broad base).

timetable

However, NZD / USD trading higher is a fact, and in this case it sets obviously the underlying bullish sentiment which allowed merchants to overreact to the CPI data. It is likely that a large risk appetite that sent all the major Asian stock indexes rising this morning, helped fueled the rally as well, allowing NZD / USD to move from 0.826 to a maximum of 0.834. At the moment the price is testing the 0.834 resistance again, but the stochastic indicator is not favorable with bullish scenarios that levels of overbought Stoch are deep and is less now link. Moreover, since the case for NZD / USD to rally to the CPI number is low, we should see a more significant bearish decline going forward.

That said, short at the moment can be risky as well because of broad positive risk appetite. Therefore, traders may want to wait for further confirmation eg break of 0.83 before determining that the previous bearish momentum that began Jan. 14 is back in the game.

Table daily

daily chart is more optimistic, however, that prices have managed to break back into the English Channel on the rise, increasing the likelihood 0.84 ceiling test price. Nevertheless curve Stochastic remains fully bearish, and considering that prices have failed to reach nearly 0815 before rebounding, the bearish rejection off Top channel and confluence with 0.84 resistance is not invalidated. Again, there was the priority, where prices began to push higher after marking 0.822 flexible support (seen on 25 September, 11 October, 31 October). As such, daily chart also says it will be risky to short NZD / USD and by conservative traders may want to wait for further confirmation as the channel bottom break for a greater possibility of strike prices 0.815.

Links:
AUD / USD - Trying to hold above 0.88
GBP / USD - 1.6450 resistance High Stands
EUR / USD - S 'settles around 1.3550

This article is only for general information purposes. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or its subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

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