The New Zealand dollar was decimated earlier during the Asian session against a number of currencies, including the US dollar. The reason for the decline was the New Zealand consumer price index data released by the Statistics New Zealand. The market was expecting the New Zealand consumer price index to increase by 1.3% (YoY). However, the outcome missed the mark, as it registered a rise of 1.0% only. It is 0.6% lower than the previous one. The New Zealand dollar was down immediately, as this was a strong bearish call for the kiwi dollar. The NZDUSD pair traded as low as 0.7831 after the release.
There is an important bullish trend line formed on the hourly chart of the NZDUSD pair, which managed to hold the downside in the pair. The pair’s downside stalled right around the mentioned trend line, and currently the pair is trading higher after finding buyers around the 0.7830 level. The most important point to note from the charts is that the RSI is around the oversold readings which might cause a small correction in the pair. So, there is chance that the pair might head towards the 38.2% fib retracement level of the last fall from the 0.8034 high to 0.7831 low where the 200 simple moving average is also sitting.
It would be really hard for the NZDUSD sellers to take the pair below the highlighted trend line, but if they manage to do so, then it might open the doors for a move towards the 0.7750 low in the short term.
Overall, one might consider selling rallies as long as the pair stays below the 200 MA.
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Posted By Simon Ji of IKOFX
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