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.

Technical Analysis

NZD/USD daily chart 5/3/2012

NZD/USD

 

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

AUD/NZD

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.

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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.

Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.