NZD/USD Rebound Vulnerable Ahead Of New Zealand CPI

NZD/USD Daily

Technical Outlook: Kiwi tested the March reversal day close at 7042 before turning lower with today’s candle attempting to post an outside-day reversal if we were to close at these levels (near-term bearish). Key near-term support rests at 6951/72 with a break of the monthly opening-range lows targeting critical support at 6861/85. Resistance / bearish invalidation stands at 7076/90 where the 100-day moving average converges on the 75% line of the descending pitchfork formation.

NZD/USD 240min

Notes: It’s too early to rely to heavily on this formation but this newly identified slope off the lows highlights near-term support at the weekly open / 61.8% line at 6990 with a more significant support confluence eyed at 6950– a break below this level would be needed to validate resumption of the broader downtrend in Kiwi.

Heading into the New Zealand Consumer Price Index (CPI) release later today, I’ll favor fading strength into structural resistance with a break below the weekly opening-range lows needed to keep the short-bias in play. Consensus estimates are calling for an annualized print of 2%, up from a previous read of 1.3% y/y.

A summary of IG Client Sentiment shows traders are net-long NZDUSD- the ratio stands at +1.76 (63.8% of traders are long)- bearish reading

Retail traders have been net-long since March 27- pair is only down 0.1% since then

Long positions are 0.9% higher than yesterday and 4.6% higher from last week

Short positions are 3.7% higher than yesterday but 21.1% lower from last week

While broader sentiment continues to point lower, it’s worth noting positioning is less net-long than yesterday but more net-long from last week and leaves the immediate short-bias vulnerable heading into tonight’s CPI print. From a trading standpoint, I would be looking to short a spike into key resistance.