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Another Leg Down as Mid-Term Support Gets Tested

The NZD/USD is trading lower after bearish momentum grew following yesterday’s U.S. CPI reports came in with mixed results showing inflation remains stubborn.

The NZD/USD is trading near the 0.62800 vicinities early today. The currency pair has seen a bearish trend develop since early February and the past week of trading has produced tests of lows. Yesterday’s Consumer Price Index reports from the U.S. came in with mixed results, but created more nervousness in financial houses because inflation remains stubborn. This notion has increased the outlook among traders the U.S. Federal Reserve will continue to take an aggressive monetary policy stance.



Flooding in New Zealand continues to create a Negative Impact on the NZD/USD

Heavy rainfall in New Zealand has created troubling flooding for the nation which will have an impact economically.  The combination of flooding and U.S. central bank concerns regarding increased interest rates has negatively impacted the New Zealand dollar. NZD/USD support levels are within sight of the lows seen in the first week of February.

Day Traders need to brace for more NZD/USD Volatility

As the NZD/USD trades near important lows and tests support, the 0.62700 level should be watched by day traders. This lower level came within sight on the 6th and 7th of February but was not penetrated. However, as nervous sentiment continues to linger within the NZD/USD technical traders will likely look at three-month charts and see the currency pair was trading below this realm with relative ease in early January. Tomorrow the U.S will release another inflation report via the Producer Price Index which is sure to stir Forex and the NZD/USD again.

  • In the near term will likely remain nervous in the NZD/USD for speculators. The PPI statistics tomorrow will deliver another taste of inflation data from the U.S. and its outcome will certainly create volatility.
  • If the inflation report comes in weaker than expected, the NZD/USD could see a burst of buying which takes the currency pair easily above the 0.63000 ratios and sustains value.
  • If these PPI numbers are stronger than anticipated this could cause more near-term selling of the NZD/USD as financial houses contemplate higher U.S interest rates.

Conservative leverage and risk-taking should be used by NZD/USD speculators in the near term.  Today’s trading may continue to test lower values, but choppy conditions should be expected as positions are placed before the Produce Price Index numbers from the U.S. tomorrow. Traders wagering on direction before the inflation report should be prepared for volatility to break out, and for the NZD/USD to see increased price velocity late tomorrow night and Friday.

NZD/USD Short-Term Outlook:

Current Resistance: 0.63000

Current Support: 0.62690

High Target: 0.63390

Low Target: 0.62380


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