I’m seeing a steady uptrend on the short-term time frame of NZD/USD!
Will the U.S. April CPI release shake things up a bit?
As you can see from the chart below, the pair is already hanging out at the very bottom of its ascending channel, probably considering a break lower.
If that happens, NZD/USD might be in for a quick reversal, so better keep your eyes on these levels.
NZD/USD 15-min Forex Chart by TV
Support around the .6350 minor psychological level, which is near the dynamic inflection points at the moving averages, is currently being tested.
A break below this could set off a drop to the next area of interest around the .6300 handle or all the way down to the resistance-turned-support zone at .6250.
Technical indicators are hinting at a potential breakdown, too.
The 100 SMA is in the middle of a bearish moving average crossover from the 200 SMA, and this might attract even stronger selling pressure.
At the same time, Stochastic is starting to head south from the overbought area, so the price could follow suit as bearish vibes return.
Uncle Sam is expecting a pickup in price pressures, as the headline inflation could accelerate from a 0.1% month-over-month uptick in March to a 0.4% increase in April.
After all, crude oil and prices of other energy commodities have been on the rise for most of the past month, likely translating to higher consumer inflation.
If that’s the case or if the actual figures turn out much stronger than expected, market players could revive hopes of more interest rate hikes from the Fed. Keep in mind that Fed head Powell mentioned that they haven’t even talked about pausing just yet!
Planning on shorting on a break lower? Just make sure you account for the average NZD/USD daily volatility of roughly 60 pips when setting entries and exits.
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