The NZ dollar fell on the back of some disappointing producer prices data out of New Zealand. PPI Output and PPI Input fell 0.5% q/q and 1.0% q/q respectively in Q2. The soft numbers were largely the result of weak dairy prices and don’t bode well for inflation going forward, thus investors responded by selling the kiwi.
NZDUSD plummeted on the back of NZ’s PPI figures, but all is not lost for the commodity currency. The next few days will be crucial for price action going forward. There is a bullish divergence between price and RSI on a few time frames, which suggests that the pair may be gearing-up for a run higher. Also, some other technical indicators support the aforementioned bullish scenario (bullish crossover in daily MACD and stochastic indicators).
However, the pair has broken through its 200-day and 200-hr SMAs – we are waiting for confirmation from the former – which is slightly concerning. There is also bearish crossover in 4-hr MACD which may highlight some underlying weakness.
Source: FOREX.com
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