NZD/USD snapped two days of consecutive gains and slid past the 200, 50, and 100-day Exponential Moving Averages (EMAs) on a risk-off impulse spurred by Fed’s hawkish commentary and expectations for further tightening. US economic data showed further deterioration, but inflation expectations increased the likelihood of another Fed hike past the May meeting. At the time of writing, the NZD/USD is trading at 0.6207, down 1.38%. On the New Zealand (NZ) front, the Business PMIS came at 48.1, below the prior’s month 51.7. Data was mainly ignored by NZD/USD traders, focusing on the following week’s CPI report, with estimates of 1.8% on QoQ Q1 inflation, while YoY is expected to remain at 7.2%.

Meanwhile, from an hourly perspective, the 0.6280s is an area of support that if broken, will likely confirm the bearish bias. However, although the price is now on the backside of the prior hourly bullish dynamic supporting trendline, the bulls are coming up for a retest of the highs in the 0.63s and thus a peak formation is yet to be put in.

On the daily chart the aggressive shift in momentum from hawkish to bearish has been proven by the bearish enfulfing and failure to break above the higher prices of the order block that are around 0.6300. We can assume that the Kiwi has completed its correction in regards to the trend on daily and is going to be providing the traders with another bearish impulsive leg to the downside. For a hawkish trend and buyers to place their positions, NZDUSD needs to break above the 0.6300 to satisfy the conditions for reversal in trend. 

Kiwi to break and continue below the order block

Apr 16 2023