The New Zealand Dollar is edging lower early Monday as the U.S. Dollar stabilizes following a sharp reversal the previous session. Boosting the Kiwi on Friday was short-covering amid easing worries about a U.S. recession after the U.S. government reported stronger-than-expected monthly jobs growth.
At 03:54 GMT, the NZD/USD is trading .6167, down 0.0021 or -0.35%.
Traders are positioning themselves ahead of Wednesday’s Reserve Bank of New Zealand (RBNZ) rate hike and red-hot U.S. consumer inflation (CPI) report.
New Zealand’s central bank is expected to deliver this week a third straight half-point rate hike in its most aggressive policy tightening in over two decades, but growing signs of a potentially sharp economic downturn may temper the hawkish dash, Reuters said.
Traders are also bracing for Wednesday’s U.S. Consumer Price Index (CPI) report, which is expected to rise to 8.8% from 8.6% in the prior read, as tracked by Trading Economics.
Trader reaction to the minor pivot at .6189 is likely to determine the direction of the NZD/USD on Monday.
A sustained move under .6188 will indicate the presence of sellers. If this move generates enough downside momentum then look for the selling to extend into last week’s low at .6125. This price is a potential trigger point for an acceleration to the downside with the May 15, 2020 main bottom at .5921 the primary downside target.
A sustained move over .6189 will signal the presence of buyers. However, traders are expecting any early rally to be a laboring event with potential resistance a long-term Fibonacci level at .6232. Following this level are a minor top at .6252 and a minor 50% level at .6261.
A trade through .6252 will change the minor trend to up and shift momentum to the upside.
The key level to watch all week is the Fibonacci price at .6232. This is controlling the near-term direction of the NZD/USD.
For a look at all of today’s economic events, check out our economic calendar.
This article was originally posted on FX Empire