The NZD/USD pair has continued to decrease in the fresh start of this week, the Kiwi remains sluggish and could drop further against the greenback in the coming days if the US dollar index will have enough energy to jump above the 96.70 horizontal resistance. The Kiwi has decreased even if the New Zealand Consumer Price Index has increased by 0.4%, the indicator has increased less than the 0.5% estimate, most likely the traders were disappointed, the currency pair has reached fresh new lows today and is approaching a critical support level.
The CPI has reached the highest growth of the last 4-months, but the pair remains under selling pressure on the short term, personally I’m waiting for a fresh new signal, the pair has retreated in the last days, but the uptrend remains intact.
We had a poor economic calendar today, the USD was driven by technical factors, the greenback has increased significantly on Friday as the United States Retail Sales, Capacity Utilization Rate and the Industrial Production have come much better than expected, today the NAHB Housing Market Index has decreased from 60 to 59 points, the indicator is still showing a favorable outlook on home sales. The US dollar could increase further if the United States Building Permits will increase tomorrow from 1.14M to 1.15M, moreover the Housing Starts could increase from 1.16M to 1.17M, the USDX could jump much higher if the data will come in line with expectations or better.

You can notice that the pair has found strong resistance at the median line (ML) of the ascending pitchfork, has fallen below the 38.2% retracement level, signaling that the medium term rebound could end if the rate will stabilize below the 38.2% retracement level. The price could start a broader decrease only if will drop below the sliding parallel line (ascending dotted line). The rate has failed once again to close above the median line (ML) of the ascending pitchfork, so the sentiment could change in the coming period if the price will stay below the median line. The Federal Reserve will publish the Federal Funds Rate in the next week, but most likely the FED will maintain the rate on hold, at 0.50%, even if there are some speculations that the FOMC will decide to hike the rate. Another disappointment could harm the USD, the traders could lose their faith in the Federal Reserve. However, the price could bounce back from the confluence area formed at the intersection of the 0.7053 level with the lower median line of the ascending pitchfork.

I’ve added a descending pitchfork to understand better the price action, the pair is trapped between the upper median line (uml) and the minor median line (ml), the first target is at the median line (ml) as long as stays inside the minor descending pitchfork’s body, could retest the upper median line (uml) before will resume the bearish movement.

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