NZD/USD Price Analysis: Bounces off 0.6985 support confluence on upbeat China inflation
|- NZD/USD reverses early Asia losses, consolidates the heaviest daily losses in two weeks.
- China inflation figures crossed forecasts for July even as CPI YoY eased below prior readings.
- Convergence of 100-SMA, three-week-old support line back the corrective bounce.
- Bulls need a clear break of immediate resistance line for conviction.
NZD/USD picks up bids to 0.7013, up 0.06% intraday, during early Monday. In doing so, the kiwi pair reverses the initial losses, backed by China’s strong inflation figures.
China’s headline Consumer Price Index (CPI) MoM rose past +0.2% market consensus and -0.4% prior to +0.3% in July whereas the Producer Price Index (PPI) crossed 8.8% YoY forecast and prior level to 9.0%.
Read: China’s CPI beats estimates with 1.0% YoY in July, AUD/USD tests 0.7350
The strong inflation numbers from a key customer helped NZD/USD to bounce off a confluence of 100-SMA and a three-week-old support line. However, bearish MACD keeps the pair sellers hopeful.
Hence, the latest corrective pullback may aim for 0.7035 but a descending resistance line from Thursday, near 0.7055, could challenge the bulls.
Also acting as the upside hurdles are the last week’s top near 0.7090 and early July tops near 0.7105.
Meanwhile, a downside break of 0.6985 may take a break near 0.6920 before challenging the monthly low surrounding 0.6880.
Overall, NZD/USD remains in the bearish trajectory but intermediate bounces can’t be ruled out.
NZD/USD: Four-hour chart
Trend: Further recovery expected
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