RBNZ Preview as NZD/USD Hovers Above a Support Cluster

Nick Nasad, chief market analyst of FXTimes notes:

Last week, CPI for the 1st quarter came in at 0.5% q/q, slightly below expectations, while the annual pace was at 1.6% - a rate that should not worry the RBNZ enough to warrant raising interest rates anytime soon. As a result, the NZD has not gotten much help fundamentally from expectations of rate hikes this year, as it seems the RBNZ will suffice to hold the Official Cash Rate (OCR) at their current levels of 2.5%.

With while helping contain inflation as an important reason for interest rate increase to be out of the picture + last week's tame inflation data = we probably will get similar language.

So, probably not a very exciting risk event, though you never know if these guys will throw in a curve-ball. The risk factors for the NZD/USD is likely going to come elsewhere.

Technical Analysis

NZD/USD

The daily NZD/USD chart shows a market trading sideways after topping off around a common high of 0.8420. A price around between roughly 0.8290 and 0.8060 has been set, and the market during 4/25 Asian trading is trading at 0.8120. Note that as we approach the range support, we are also breaking below a rising trendline projected back to November 2011.

Also note the 200-day moving average (and all the moving averages from 200 down to 8SMA for that matter).

The daily RSI reading is just above 40. A push below 40 can be interpreted as a loss of bullish momentum established during the bull run that started in November 2011. A price break below 0.8050 and a push of the RSI below 40 will have a clearer break below all the above mentioned pivot factors.

The range breakout target taking the width of the range projected in the direction of the breakout is about 0.7840. There is also a pivot seen around 0.7875. This should represent an area of possible support for the bearish outlook coming from a break below 0.8050.

The 4H chart shows price action that has been staying below the 200SMA for a period while whipping the 100, 55, 21, and 8 SMAs, until the 200 SMA also joined the part for brief period. After all this directionless trading, the market is starting to hold under the moving averages.

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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.