NZD/USD Forex Technical Analysis – Tight Trading Range as Traders Brace for Thursday’s US CPI Data

The New Zealand Dollar is trading flat early Thursday as traders await the release of a major report on consumer inflation (CPI) at 12:30 GMT. Investors will be looking at the report for signs on whether the Federal Reserve’s interest rate hikes are working as a measure to throttle persistent inflation.

The Headline CPI is expected to have risen 0.2% in September. Annually, that monthly gain translates to an 8.1% jump, down from the previously reported 8.3%. The more closely watched Core CPI is forecast to have risen 0.4%.

Firm-to-higher CPI will solidify the chances of a 75-basis-point rate hike by the Fed at its November meeting. This should give the U.S. Dollar a boast while pressuring its New Zealand counterpart.

At 04:26 GMT, the NZD/USD is trading .5611, up 0.0001 or +0.02%.

In other inflation-related news, U.S. wholesale prices came in hotter than expected as reported on Wednesday. September’s producer price index data, which measures wholesale prices of goods, rose 0.4%, according a report from the Bureau of Labor Statistics. Excluding food, energy and trade services, PPI increased 0.3%. Economists surveyed by Dow Jones were expecting headline PPI to add 0.2%.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. However, the selling stopped on Tuesday when buyers formed a closing price reversal bottom. This could be an early sign of a shift in momentum.

A trade through .5536 will negate the chart pattern and signal a resumption of the downtrend. A move through .5814 will change the main trend to up.

The minor range is .5814 to .5536. Its 50% level at .5675 is the nearest resistance. The short-term range is .6162 to .5536. Its retracement zone at .5849 is another upside target.

Daily Swing Chart Technical Forecast

Trader reaction to .5597 is likely to determine the direction of the NZD/USD on Thursday.

Bullish Scenario

A sustained move over .5597 will indicate the presence of buyers. If this creates enough upside momentum then look for a surge into the minor pivot at .5849.

Sellers are likely to come in on the first test of .5849. However, overtaking it could trigger an acceleration into the main top at .5814, followed by the short-term 50% level at .5849.

Bearish Scenario

A sustained move under .5597 will signal the presence of sellers. If this generates enough downside momentum then look for a break into the minor bottom at .5536.

Taking out .5536 will signal a resumption of the downtrend and could extend the selling into the March 19, 2020 main bottom at .5469. We could see a technical bounce on the first test of this level, but if it fails then look for a possible acceleration to the downside.