Last week I highlighted a potential bearish development in the Kiwi on the back of weaker economic data out of New Zealand against a strengthening Dollar outlook.
NZDUSD has since stabilized somewhat here, failing to break down towards the NFP low print. This stabilization has come on the back of an improved risk sentiment owing to the positive results from the weekend bank stress test results and the dissapoininting US data seen today with Durable Goods missing by quite a margin at -1.3% v exp 0.5%.
Overall, the fundamental picture for the Kiwi is still weak given the revised inflation outlook for NZ and the RBNZ’s distain for a high exchange rate. This is a week full of factors which could influence NZDUSD. Apart from the all-important FOMC meeting tomorrow, there is RBNZ rate decision and Friday’s US GDP print.
Many market particpants are pushing back their expectations for interest rates in NZ with the possibility that the RBNZ will leave monetary policy alone until late 2015.
Technically, bearishness still remains preferred here. On the lower timeframes, price broke down through the trendline from the NFP lows and is currently failing on a retest of the trendline here with Order Flow Indicators still to the downside. If we close with a bearish H4 pin bar here I will take a spec short on a break of the low of the bar.
Daily Order Flow Indicators have crosed higher here as the consolidation at lows grind on and will be looking for them to cross lower again on continued downside here. However, If price grinds higher and retests last week’s highs I will be looking for rejection candles to enter shorts.
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