The NZD/USD could resume the short retreat if the US dollar index will manage to jump much higher and to reach new highs, the index has retreated in the start of this week but now looks determined to reach the last week high. You have to keep an eye on the economic calendar today as the US is to release the inflation data, the US trading hours may bring high volatility on the major pairs, remains to see how the USD will react, most likely will increase if the data will come in line with expectations, only a disappointment will weaken the greenback on the short term.
The price is trading above the 0.6780 level, but is showing exhaustion signs, you can see that the pair has come to retest the lower median line (lml) of the ascending pitchfork, the rate has jumped much above this level in the Asian session, but the bears have dragged the price down again. The NZD/USD could escape from the ascending pitchfork’s body and could start a broader retreat on the short term, the rate needs to take out the support from the sliding parallel line to be able to drop in the coming period. The current retreat was expected after the price has failed to stabilize above the median line of the ascending pitchfork, has failed to retest this level in the last attempt and now could drop much deeper if the US dollar index will resume the rebound.
The US dollar index could push the greenback much higher versus all its rivals if the United States economic data will come better today, the Consumer Price Index may increase by 0.3% in April, much higher compared to 0.1% in March, could reach the highest level after July 2015. Moreover the Core CPI could rose by 0.2% in April, higher than the 0.1% in March. Building Permits may increase to 1.13M, from 1.09M, the Housing Starts could increase as well from 1.09M to 1.12M in April. The US dollar is expected to edge higher if the data will come as expected or better. The United States Capacity Utilization Rate could increase to 75.1%, while the Industrial Production is expected to increase again after 2 declining months, the economic indicator could increase by 0.3% and could reach the highest level of the last 3-months.
Kiwi has increased in the morning even if the New Zealand Inflation Expectations has remained steady at 1.6% growth. The GDT Price Index is expected to be released by GDT, remains to see how the Kiwi will react.
The price is retesting the lower median line (LML) of the daily ascending pitchfork, has rebounded from above the sliding parallel line, I’ve drawn a descending pitchfork to show you better the correction phase, the bearish movement could continue if the price will stay inside of the descending pitchfork’s body, could test the upper median line and then could resume the downward movement. The pair could plunge if the United States economic data will come much better, a drop below the sliding dotted line will open the door for more declines.