5/2/2012: 6:45PM EDT - Q1 Employment change was 0.4% versus the 0.5% forecast, but is better than Q4 of 2011, which was 0.2% (revised from 0.1%). However, the unemployment rate went up to 6.7% versus forecast of 6.3%, up from the previous rate of 6.4% (revised from 6.3%). This data was disappointing and the NZD/USD slid while the AUD/NZD rallied.
NZD/USD daily chart 5/3/2012
The NZD/USD broke below 0.8050 which was recent range support. This was coincident with a break below the 200-day simple moving average, a sign the market is turning bearish. The daily RSI reading is cracking 40. Clearing below 40 is a sign that the bullish momentum from the bull run since November is over. A breakout target using the width of the range projected in the direction of the breakout points to 0.7840. Above this target, we also have a pivot area to monitor, near 0.7875.
Watch out for the US Non-Farm Payroll data on Friday 5/4 to provide more clue whether this will extend. If the NZD/USD rallies and stays above 0.81 after the US data, the bearish outlook may have to be shelved. The fate of the NZD/USD probably depends more on market's view of the USD than the NZD, so this will be a more important employment data.
To show that NZD/USD dipped not only on the USD-strength seen across the board, let's take a look at the AUD/NZD.
AUD/NZD daily chart 5/4/2012
The AUD/NZD, has already been rallying from the 1.2514 level. The rally is in the context of a bearish market, and still has not violated the declining trendline, 200-day simple moving average, and the RSI reading is still at 60. Only a break above 1.29 and the declining trendline will signal a reversal, first opening up the 1.3056 pivot. Otherwise, if the market falls back below the counter-trend channel that has formed since the 1.2514 low, we would open up a bearish continuation scenario, first with that 1.2514 low in sight.
Fan Yang CMT is a trader, analyst, educator and Chief Technical Strategist for FXTimes - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.
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