NZD/USD seeks direction, eyes NZ CPI release
|- NZD continues to trade in the sideways manner for the fifth straight session.
- NZ annualized CPI is seen falling to lowest since September 2016.
The rally in the NZD/USD pair from the March 21 low of 0.7153 seems to have run out of steam as indicated by the range-bound trading.
As of writing, the pair is trading at .7362 - largely unchanged on the day. The mixed China data does little to provide a clear direction to the Kiwi.
Moreover, the currency pair has been restricted largely to a narrow range of 0.74 and 0.7330 since April 11. A convincing move above 0.7395 (April 13 high) would signal a continuation of the rally from 0.7153. On the other hand, acceptance below 0.7330 could mean the tide has turned in favor of the bears.
That said, the range breakout will likely be decided by the New Zealand’s Consumer Price Index (CPI) for the March quarter, due this Thursday. Westpac expects the CPI to rise 0.5 percent, which would see annual inflation drop to 1.1%, its lowest since September 2016.
A better-than-expected number could put a bid under the Kiwi dollar, while a weak figure would add credence to the IMF's view that current monetary policy is appropriately expansionary and weigh over the NZD. Also, the broader market sentiment will likely play a major role in deciding the next major move in the Kiwi dollar.
NZD/USD Technical Levels
A break above 0.7376 (April 10 high) would expose resistance at 0.7395 (April 13 high) and 0.7436 (Jan. 24 high). On the downside, a close below 0.7332 (10-day MA) would indicate the rally from the low of 0.7153 has ended and could yield a deeper pullback to 0.7185 (200-day MA) and 0.7241 (April 6 low).
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