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James Hyerczyk
New Zealand Dollars
New Zealand Dollars

Better-than-expected consumer inflation data sent the New Zealand Dollar surging earlier in the session. However, the rally stalled when the currency hit a key Fibonacci level on the daily chart.

According to Statistics New Zealand, headline consumer price inflation (CPI) jumped by 0.9% in the three months to September, the largest quarterly increase since the first three months of 2017. Despite the solid report, the data is not expected turn the Reserve Bank of New Zealand hawkish, but it probably reduced the chances for a central bank rate cut.

At 0337 GMT, the NZD/USD is trading .6572, up 0.0020 or +0.30%.


Daily Technical Analysis

The main trend is up according to the daily swing chart, however, momentum has been trending higher since the formation of the closing price reversal bottom on October 8 at .6424.

A trade through .6700 will change the main trend to up. A move through .6424 will negate the closing price reversal bottom and signal a resumption of the downtrend.

The minor trend is up. This is contributing to the upside momentum. A trade through .6494 will change the minor trend to down. This will also shift momentum to the downside.

The main range is .6700 to .6424. The market is currently testing its retracement zone at .6562 to .6595. Trader reaction to this zone will determine the near-term direction of the Forex pair.


Daily Technical Forecast

Based on the early price action, the direction of the NZD/USD the rest of the day will be determined by trader reaction to .6595 and .6562.

Look for a sideways trade if the NZD/USD remains inside the 50% level at .6562 and the 61.8% level at .6595.

A sustained move under .6562 will indicate the presence of sellers. This could lead to a quick test of the uptrending Gann angle at .6544. This angle provided support earlier in the session.

If .6544 fails as support then look for the selling to extend into a downtrending Gann angle at .6530. Crossing to the weak side of the angle at .6530 will indicate the selling pressure is getting stronger. This could eventually lead to an uptrending Gann angle currently at .6484.

Overtaking and sustaining a rally over .6595 will signal the presence of buyers. This could trigger a rally into the downtrending Gann angle at .6615. Since the main trend is down, sellers could come in on a test of this angle. It is also the trigger point for an acceleration to the upside with the next target angle coming in at .6658.

Basically, look for the upside bias to continue on a sustained move over .6595. A downside bias is likely to develop on a sustained move under .6562.

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