NZD/USD sees inverse head-and-shoulders breakout on RBNZ's strong core inflation number

NZD picked up a strong bid after RBNZ’s preferred measure go core inflation hit a 7-year high.
The NZD/USD hourly chart shows an inverse head-and-shoulders breakout.

Omkar Godbole FXStreet Contributor

The NZD/USD jumped 60 pips to a session high of 0.6835 after the RBNZ’s preferred measure of core inflation for the second quarter printed at a 7-year high of 1.7 year year-on-year.

At press time, the currency pair is trading at 0.6830 and is looking north, courtesy of an inverse head-and-shoulders breakout.

Kiwi had dropped to a low of 0.6755 in early Asia after New Zealand reported a softer than expected consumer price index, raising concerns the RBNZ will have to keep rates on hold for an extended period. However, NZD quickly rebounded to 0.6775 and picked up a strong bid after wires reported RBNZ’s core inflation measure - the sectoral factor model - at a 7-year high.

The kiwi bulls could be feeling emboldened, courtesy of upbeat RBNZ’s core inflation figure and inverse head-and-shoulders breakout, and hence the pair may remain solidly bid ahead of Powell’s testimony to congress.

NZD/USD Technical Levels

The inverse head-and-shoulders breakout, as seen in the hourly chart below, has opened the doors to 0.6865 (target as per the measured move method).

Hourly chart

Spot Rate: 0.6830

Daily High: 0.6835

Daily Low: 0.6755

Trend: Bullish

Resistance

R1: 0.6865 (inverse head-and-shoulders breakout target)

R2: 0.6898 (50-day moving average)

R3: 0.6922 (June 25 high)

Support

S1: 0.6795 (200-hour MA)

S2: 0.6768 (50-hour MA)

S3: 0.6755 (session low)

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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