NZDUSD makes a break to the downside as “risk off” flows send the pair lower.

At the start of the day today, New Zealand announced a 30+ year high for y/y CPI, with broadly-based price rises across sectors in the economy. The implication for the Reserve Bank of New Zealand is confirmation of rate hikes still to come and probably at even faster rate to an even higher end point (data dependent of course)

Did the NZDUSD find a bid on the news?

Nope. The pair has been moving lower and just reached a new low for the day. The current price is at 0.6586.The low reached 0.65744.

The low has also taken the price to the lowest level since October 21, 2020, and further away from a downward sloping trend line on the daily chart at 0.6658. It will now take a move back above that trend line to give buyers some relief. Absent that on the daily chart, and the sellers are more in control.

Staying on the daily chart, the pair is looking toward lows from October 2020 at 0.6546. Below that and traders will be eyeing a swing area between 0.6488 and 0.6511. The 50% of the move up from the March 2020 low cuts across at 0.6466. All those levels are now in play on more weakness going forward.

Pulling back and looking at the hourly chart below, the pairs high yesterday after the FOMC, stalled right at the falling 100 hour MA (blue line). That certainly did not help the buyers, and instead gave the sellers ammunition for more selling, and worried the buyers.

Those fears were raised when after the CPI, the price could barely get above the lows from Monday at Tuesday at 0.6659. The high reached 0.6660. Buyers gave up. The price moved even lower.

What next?

The move from the 100 hour MA to the low has the 38.2% to the 50% as resistance between 0.6623 to 0.6638. Get above that level (assuming the current low does not get lower which it could), and the dip buyers have a small win. It would take more, but it would be a start (with the broken trend line at 0.6658 the next target). Absent that, and the sellers are still in control.