AUD/USD and NZD/USD Fundamental Analysis: China CPI in Focus

Highlights

• The AUD/USD and the NZD/USD enjoyed a bullish end to last week on the US Jobs Report.
• This morning, there are no economic indicators from Australia or New Zealand to draw interest.
• However, June inflation numbers from China will move the dial.

It is a quiet start to the day for the AUD/USD and NZD/USD. There are no economic indicators from Australia or New Zealand to draw interest this morning. The lack of economic indicators will likely leave investors to consider the US Jobs Report and sentiment toward the Fed monetary policy outlook.

Later this morning, inflation numbers from China will draw interest. Economists forecast the annual inflation rate to hold steady at 0.2%. A 0.2% inflation rate would shift the market focus to the Producer Price Index, which could signal more doom and gloom. Economists forecast the PPI to fall 5% year-over-year versus a 4.6% decline in May.

The European Session

It is a quiet day ahead on the European economic calendar, with no euro area economic indicators to affect market risk sentiment. The lack of stats will leave central bank chatter in focus.

The US Session

It is also a quiet day ahead on the US economic calendar. There are no US economic indicators to provide direction in the afternoon session. The lack of economic indicators will leave Fed chatter to influence.

FOMC members Barr, Bostic, Daly, and Mester are on the calendar to speak today.

AUD/USD Price Action

Daily Chart

The Daily Chart showed an AUD/USD remained below the psychological $0.67 resistance level and the $0.6750 – $0.6770 resistance band.

However, the AUD/USD stood above the 50-day EMA ($0.66868) while remaining below the 200-day EMA ($0.67485), signaling bullish momentum over the near term and a bearish longer-term outlook.

Notably, the 50-day EMA narrowed to the 200-day EMA and reflected bullish momentum following the Friday breakout.

Looking at the 14-Daily RSI, the 50.73 reading signals a moderately bullish trend and aligns with the 50-day EMA. The bullish indicators support a run at the 200-day EMA ($0.67485) and the lower level of the $0.6750 – $0.6770 resistance band.

4-Hourly Chart

Looking at the 4-Hourly Chart, the AUD/USD faces strong resistance at the $0.67 psychological level. After the Friday rally, the AUD/USD sits above the 200-day ($0.66846) and 50-day ($0.66661) EMAs, bullish signals. Significantly, the 50-day EMA narrowed to the 200-day EMA, signaling a run at the $0.6750 – $0.6770 resistance band.

The AUD/USD must hold above the 200-day EMA to retarget the lower level of the resistance band of $0.6750 – $0.6770.

Looking at the RSI indicator, the 14-4H RSI reading of 59.44 indicates a bullish stance, with buying pressure outweighing selling pressure. The RSI is aligned with EMAs and supports a run at the lower level of the $0.6750 – $0.6770 resistance band.

NZD/USD Price Action

Daily Chart

The Daily Chart showed an NZD/USD break through the $0.6200 psychological level on a bullish Friday session. Significantly, the EMAs mixed signals. The Kiwi dollar sat above the 50-day EMA ($0.61666) while below the 200-day EMA ($0.62212).

Notably, the 50-day EMA narrowed on the 200-day EMA, reflecting bullish momentum over the near term but bearish over the longer term.

Looking at the 14-Daily RSI, the 56.06 reading signals a moderately bullish trend, supporting a run at the 200-day EMA ($062212) and the lower level ($0.6234) of the $0.6234 – $0.6250 resistance band.

4-Hourly Chart

Looking at the 4-Hourly Chart, the NZD/USD faces strong resistance at the $0.62 psychological level. After the bullish Friday session, the NZD/USD sits above the 50-day ($0.61631) and 200-day ($0.61578) EMAs, supporting a run at the $0.6234 – $0.6250 resistance band.

Notably, the 50-day EMA pulled away from the 200-day EMA after the 50-day EMA bullish cross through the 200-day EMA, a bullish signal.

The 14-4H RSI reading of 60.32 indicates a bullish outlook, with buying pressure outweighing selling pressure. Significantly, the 14-4H RSI aligns with the EMAs and signals a run at the $0.6234 – $0.6250 resistance band.