On the daily chart below for
NZDUSD, we can see that the price couldn’t break above the key 0.6389 resistance again and sold off soon after as
the USD appreciated due to better than expected data that might force the Fed
to hike again in June.
In fact, all the recent Fedspeak
kept the door open for another increase in interest rates next month, but that
will be decided mainly by the next NFP and CPI reports. Yesterday’s US
Retail Sales data beat expectations giving the greenback
another boost. The sellers at the moment are in control, and the natural target
should be the support at 0.6084.
On the 4 hour chart below, we can
see that the price fell really fast after breaking out of the trendline. Looks like the buyers didn’t
have much conviction and folded as soon as the momentum switched to the
downside. The final push lower was caused by the University
of Michigan consumer sentiment report where the data missed
expectations across the board and the long-term inflation expectations
surprised with a big jump. Fed Chair Powell once mentioned that they consider
consumer inflation expectations in their decisions. Anyway, the market pulled
back on Monday to the red long period moving
average and the 38.2% Fibonacci
retracement level before falling again.
On the 1 hour chart below, we can
see that the sellers were leaning on the 38.2% Fibonacci retracement level. The
price has now broken below the counter-trendline, which should signal the end
of the pullback and the start of another leg lower. The key levels to watch
here are the Fibonacci level and the swing low support at 0.6234. The buyers
will need the price to break above the Fibonacci level to regain control and
possibly target the 0.6389 resistance again. The sellers, on the other hand,
will need the price to break below the 0.6234 to pile in more aggressively and
extend the selloff towards the 0.6084 support.