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NZD ahead of Next Government News & Q3 CPI

Market Analysis

NZDUSD & EURNZD, H1 and H4

Today, the dollar traded mostly firmer, which follows losses on Friday in the wake of the sub-forecast U.S. data and, before that, about a week long period of declines. Euro weakness on the other side mainly affected by politics , which seems to be in focus this week as well, with  Austria moving to the right in general election and  support for the populist FPOe is rising. In Germany regional elections undermined support for Merkel ahead of crucial coalition talks, while in Spain’s Rajoy’s ultimatum to Catalonia runs out.

Hence we have seen so far, EURUSD trading below 1.1800, driven in part by dollar firmness and in part by euro weakness, EURNZD trading below 1.6500 and NZDUSD at 0.7180, with the last two crosses driven by the Hotter that expected Chinese Inflation September data  this morning along with the anticipation tomorrow for an expansion to 0.4% of Q3 CPI. however the Main drivers have been the anticipation on  NZ next government along the softer than expected US Inflation data.

Therefore two entries have been taken in favour of NZD. Firstly a long position was taken in NZDUSD at today’s opening at 0.7172.  This position was triggered by the break on Friday of 200- Day Moving average and the closing above that. The pair keeps traded today above that level , while it seems to testing the 20-Day MA level as well. The RSI is at 58, while Parabolic SAR turned positive since Friday.  The 4-hour and hourly charts present a consolidation at 0.7160- 0.7170 area, with the pair being unable to break it downwards. Meanwhile, in the houly chart, the price moves along with 20-period MA, on an upwards movement.

 

Therefore an hourly Target was set above recent high fractal at 0.7200, which is also the 38.2 Fibonacci Level since September 20, while if this level breaks, then we are holding a 4-hour Target 2 and Daily Target 3, at 0.7220 and 0.7230 (which is the 50-Day MA). Short-term support was set at 23.6 Fib. level at 0.7150 ,and the Daily Support at 0.7120. 

Last but not least, EURNZD, broke in the 4-hour chart, the recent low Fractal but also the significant 200-period MA, which triggered our Short Position entry at 1.6422. With Stochastic being at the oversold territory since October 12, and Bollinger Band pattern extending its lower line, Two 4-hour targets have been set at 1.6355  and 1.6300.  Support is at 1.6490 and 1.6550 respectively. Importantly is the sharp decline in the daily Stochastic as presented below, which suggest weakness of the pair.

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Andria Pichidi

Market Analyst

HotForex

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