The news circulating in the Forex circles is that there is short term deterioration of volatility in the market, a fact that got the RBNZ concerned and is going to intervene to keep things in control and avoid a further slump in volatility. With this very important news, we shall see what will happen with the NZD now that it is trading in around a 3% premium against other currency basket in its TWI and adversely affecting exports and the economy. Back in the US, during yesterday’s speech at the International House in New York, she rebuffed claims that the US economy is a big bubble ready to burst and stated that though there is general global slowdown, the inflation was growing and the unemployment rate was stable. Fundamentals like these affect our chart and let’s see on how they behaved:

Daily Chart Analysis

Technical Analysis

From a technical point of view, the USD is gaining ground against the NZD and yesterday candle stick revealed that last week’s high was a big false breakout and the resistance line is too strong to be broken. Price temporarily breached the resistance line in the Asian session but it then reversed as shown by the reducing momentum of the Stochastics from the overbought regions downwards. This reduction in momentum is also evident from the way the price is rejected from the upper BB and if price action close below the 20 day moving day average, we shall be looking for short entries in the shorter time frames.

Fundamental Analysis

Yellen’s assertions are well cemented by facts and that the headline unemployment rate will likely remain steady at or below 5% with stellar news in the past few weeks. The unemployment claims dipped from 276K to 267K while the consumer credit increased from 14.9B to 17.2B meaning more expenditure and a probability of increasing inflation.

Verdict: Sell

4 HR Chart Analysis

Technical Analysis

From the chart, the support trend line was breached and is now acting as a resistance as the price action is bouncing off from it. Even though there is mixed signals from this timeframe with the momentum in the oversold regions, 20 day moving average slopping down and the candle sticks moving sideways from the lower BB, we shall wait and see if price breach the 200 day moving average which is a major support. If it does, the downward prevails.

Fundamental Analysis

The current trend is surely from the good news from the US all pointing to a positive USD. There are no major news today other than the wholesale inventories to be released at 300PM GMT+3 projected to fall to -0.2% from 0.3% last month.

Verdict: Sell

15 Min Chart Analysis

Yesterday’s reversal from the resistance line continued and even though price rose slightly at the Asian session, it didn’t breach the 4 HR resistance trend line or reversed from the 61.8 Fibonacci level. We remain neutral at the moment and look to sell from all highs after a good indicator combination probably in the London Session.

Verdict: Sell at all highs