The New Zealand Dollar closed sharply lower on Wednesday but off its lowest level since January 3 as positive economic data from China and the government’s decision to scrap a capital gains tax helped offset some of the negative impact of a weaker-than-expected consumer inflation report.
Early in the session, Statistics New Zealand reported that the Consumer Price Index (CPI) for the first quarter came in at 0.1 percent, below market expectations of 0.3 percent and the Reserve Bank of New Zealand’s (RBNZ) 0.2 percent forecast. The annual inflation rate now hits at 1.5 percent, below the central bank’s 2 percent target.
At 21:33 GMT, the NZD/USD is trading .6725, down 0.0001 or -0.00%.
In other news, Prime Minister Jacinda Ardern said the public has spoken and she won’t introduce a capital gains tax while she leads the Labor Party. Secondly, new data from China showed Gross Domestic Product grew at a 6.4 percent annual pace in the March quarter, above expectations for a 6.3 percent growth rate. This indicates that the Chinese economy may have turned the corner on the back of fresh stimulus from the government.
Daily Technical Analysis
The main trend is down according to the daily swing chart. A trade through .6668 will signal a resumption of the downtrend. A move through .6784 will change the main trend to up.
The main range is .6591 to .6943. Its retracement zone at .6767 to .6725 is controlling the longer-term direction of the NZD/USD. The Forex pair is currently trading inside this zone.
Daily Technical Forecast
Based on yesterday’s close and the current price at .6725, the direction of the NZD/USD on Thursday is likely to be determined by trader reaction to the major Fibonacci level at .6725.
A sustained move over .6725 will indicate the presence of buyers. This could trigger a quick move into a downtrending Gann angle at .6739. Taking out this angle could trigger an acceleration to the upside with the next major targets a major 50% level at .6767, an uptrending Gann angle at .6779 and the main top at .6784.
A sustained move under .6725 will signal the presence of sellers. If this move creates enough downside momentum then look for the selling to extend into the nearest uptrending Gann angle at .6685.
Taking out .6685 could trigger a further break into yesterday’s low. If this fails as support then look for the selling to extend into the next uptrending Gann angle at .6638. This is the last potential support angle before the .6591 main bottom.
This article was originally posted on FX Empire
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