On Monday, the pair NZD/USD corrected after significant rise last week. It happened due to weak data on consumer price index for Q1 in New Zealand. The index amounted to 0.1% on annual basis, which was lower than expected.
Therefore, economy of New Zealand has approached the threshold of deflation. Today, the quotes will increase again due to pressure on the American dollar caused by the positive ZEW index of business sentiment in Eurozone. The index has reached the record since February last year at the level of 64.8 points.
Support and resistance
Technically, the price consolidates above the middle line of Bollinger bands, using the latter as a support level. It is likely that the nearest target of the “bulls” will be the level of 0.7725.
Technical indicators show that upward movement will continue. Bollinger bands are directed upwards, tending to narrowing. MACD histogram is in the positive zone; its volumes are not decreasing any more. Stochastic lines have turned upwards.
Support levels: 0.7670 and 0.7625 (Fibonacci retracement of 23.6%).
Resistance levels: 0.7700, 0.7725 and 0.7760.
In the current situation it is advisable to open short-term long positions at the current price with the target of 0.7725. Short positions with the target of 0.7625 can be opened only if the price breaks down the level of 0.7670 (middle line of Bollinger bands). Pending sell orders are advisable at the level of 0.7725 with the target of 0.7670.