The NZD/USD has dropped significantly today and has erased the morning gains, the dollar has dragged the price down also because the United States data have come in mixed in the afternoon. Price has bounced back in the last days as the dollar index continues to stay right below the 99.12 broken support.
The dollar index is still challenging the 99.12 level, only a breakout above this level followed by a minor consolidation will confirm a further increase, the dollar will dominate the currency market only if the USDX will jump much higher in the upcoming period.
The Kiwi has edged higher in the early morning ahead of the New Zealand data release, but has started a sell-off after the figures were sent to the public. The greenback could increase further versus the Kiwi as the Federal Reserve has maintained the Federal Funds Rate steady at 1.00%, matching expectations, but most important is that they emphasized the strength of the labor market, so will be no surprise if will see a rate hike in June. Personally, I still don’t believe that the FED will raise the interest rate so soon, but anything could happen if the US data will come better in the upcoming weeks.
The USD has increased in the afternoon as the US data have come in mixed, the ISM Non-Manufacturing PMI has continued the uptrend, was reported at 57.5 points in April, much higher versus the 56.1 estimate and versus the 55.2 points in March, has signalled that the expansion continues, while the Final Services PMI increased from 52.5 to 53.1 points, beating the 53.1 estimate. Unfortunately the ADP Non-Farm Employment Change has disappointed a little because was reported at 177K, lower versus the 178K estimate and versus the 255K in the previous reporting period.
On the other hand, the Kiwi has dropped even if the New Zealand Employment Change rose by 1.2% in Q1, beating the 0.8% estimate and the 0.7% growth in the former reporting period, while the Unemployment Rate has dropped unexpectedly lower, was reported at 4.9% the first quarter, much below the 5.1% estimate, but the Kiwi wasn’t too impressed.

NZDUSDDaily

The price goes down like a rock after the failure to reach and retest the upper median line (UML) of the major descending pitchfork and now is very close to hit again the fourth warning line (WL4) of the former ascending pitchfork. A valid breakdown below the WL4 will open the door for more declines declines in the upcoming weeks. Is somehow expected to drop further after the failure to stabilize above the upper median line of the major descending pitchfork, the next major downside target will be at the median line (ML) of the descending pitchfork.

NZDUSDh4

A further drop is natural after the failure to reach the UML, price is trading within a down channel and should drop below the warning line (WL4), a retest of the broken warning line will bring us a good selling opportunity.

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