- NZD/USD bulls eye a test of resistance before Thursday's CPI event that leaves the 0.6470s exposed.
- NZD/USD traders will be looking to the lower timeframes for signs of deceleration from the bulls that could lead to a break of 0.6200.
NZD/USD is heading into the end of the North American session flat on the day so far, giving kudos to the prior technical analysis, NZD/USD Price Analysis: Bears are lurking in critical resistance area.
In forex markets that are treading water in search of catalysts, at the time of writing, NZD/USD is trading at 0.6367, about where it opened on Tuesday but it ranged between a low of 0.6342 and 0.6389 on the day.
US CPI data in focus
In a note at the start of the Asian day on Wednesday, analysts at ANZ Bank said the fact that ''FX markets are treading water ahead of key US CPI data tomorrow night is no real surprise given the amount of emphasis bond markets is putting on that data (as the last major piece of the puzzle before the February Federal Reserve meeting).''
The analysts added that ''markets remain USD centric; and while US CPI has the scope to weaken the USD if the data is weak/softer, one of the Fed’s key messages remains that wherever its policy rate peaks, cuts will be a long way off. That may yet dampen USD headwinds.''
As for the expectations of the CPI data, analysts at TD Securities said that they are looking for core prices to have edged higher on a month-on-month basis (MoM) in December, closing out the year on a relatively stronger footing.
''Indeed, we forecast a firm 0.3% MoM increase, as services inflation likely gained momentum. In terms of the headline, we expect Consumer Price Index (CPI) inflation to register a slight decline on an unrounded basis in December but rounded up to flat MoM, as energy prices offered large relief again. Our m/m projections imply that headline and core CPI inflation likely lost speed on a year-over-year basis in December,'' the analysts added.
For the US Dollar, the analysts said ''unless the core measure significantly surprises to the upside, USD rallies should be sold into. We think the bar is high to compel a reversal of fortune despite the USD tactically stretched.''
NZD/USD technical analysis
Nevertheless, as per the prior technical analysis, NZD/USD is on the backside of the prior bullish trend and could be lining up for a bearish breakout:
That is not to say, however, that a test of resistance cannot happen before Thursday's CPI event. This leaves the 0.6470s exposed. In any case, traders will be looking to the lower timeframes for signs of deceleration from the bulls that could lead to a break of 0.6200 and the 0.6191 recent lows in time to come.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD stays in positive territory above 1.0850 after US data
EUR/USD clings to modest daily gains above 1.0850 in the second half of the day on Friday. The improving risk mood makes it difficult for the US Dollar to hold its ground after PCE inflation data, helping the pair edge higher ahead of the weekend.
GBP/USD stabilizes above 1.2850 as risk mood improves
GBP/USD maintains recovery momentum and fluctuates above 1.2850 in the American session on Friday. The positive shift seen in risk mood doesn't allow the US Dollar to preserve its strength and supports the pair.
Gold rebounds above $2,380 as US yields stretch lower
Following a quiet European session, Gold gathers bullish momentum and trades decisively higher on the day above $2,380. The benchmark 10-year US Treasury bond yield loses more than 1% on the day after US PCE inflation data, fuelling XAU/USD's upside.
Avalanche price sets for a rally following retest of key support level
Avalanche (AVAX) price bounced off the $26.34 support level to trade at $27.95 as of Friday. Growing on-chain development activity indicates a potential bullish move in the coming days.
The election, Trump's Dollar policy, and the future of the Yen
After an assassination attempt on former President Donald Trump and drop out of President Biden, Kamala Harris has been endorsed as the Democratic candidate to compete against Trump in the upcoming November US presidential election.