NZD/USD Technical Strategy: NEUTRAL
- New Zealand Dollar probes below 0.67 following soggy CPI figures
- Confirmation still needed to make the case for downtrend resumption
- Close above trend line from October’18 lows invalidates bearish bias
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The New Zealand Dollar sank following disappointing CPI data, with prices on pace to register the largest drop in two weeks. A clear-cut breakout remains unconfirmed however as prices push up against support in the 0.6699-0.6727 area. This has been an important inflection region since July 2018.
A daily close below this barrier would strongly suggest that the downward trend against the US Dollar started in April 2018 is resuming and expose the next downside hurdle in the 0.6591-0.6619 zone. Neutralizing selling pressure probably needs a close above rising trend line support-turned-resistance, now at 0.6834.
In the meantime, traders may judge current positioning as unattractive for an actionable trade. On one hand, a short seems ill-advised from a risk/reward perspective as prices sit squarely at support. On the other, the absence of compelling evidence for a bullish reversal hints that taking up the long side is premature.
NZD/USD TRADING RESOURCES:
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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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