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BACK TO THE FUTURES: JPY bulls back away
ANZ's monthly inflation gauge rose 0.1% today, with strength coming mainly from the housing group. With housing stripped out the read is -0.1% which could put pressure on RBNZ to ease further and / or sooner.
The Kiwi Dollar continued its retreat and now sits at 6-week lows, having broken beneath the bullish channel. In a similar manner to AUDUSD, the decline form the highs appears to be impulsive so now seeking opportunities to fade into any resistance areas.
Bearish picture is evolving
- W1 produced a dark cloud cover
- Now trading beneath last week's lows the pattern has been confirmed as a bearish reversal
- I am satisfied the top has been seen at 0.7053 (shooting star 3 weeks ago)
- Broken below the 50 eMA on W1 and both 50/200 ema on daily
- Key reversals formed across several USD pairs
Price has found support around 0.676 and I am open to a pullback towards the lower channel. The 200 eMA and MS1 around 0.686 may provide resistance, but it is not the end of the analysis if we break above this level as the lower bullish channel wasn't truly confirmed with 3 touches.
0.667 to 0.657 in focus
- As the week progresses I'll be seeking to fade into areas of resistance up to 0.685 for a move down to 0.667-0.664 (swing low and MS2).
- We also have a zone between 0.657 and 0.660 which we could target, assuming USD continues to live up to its' signs of strength.
RBNZ release their financial stability report tomorrow morning and Governor Greg Wheeler is speaking, so we'll be keeping an eye on any comments which may provide warnings of further easing (especially in light of the RBA cut and lower inflation forecasts).
The on Thursday business PMI data is released. On relative terms both services and manufacturing PMIs remain elevated, although the manufacturing employment index has contracted for two consecutive months and new orders fell to a 4-month low. However new orders at 58.2 is still a respectable level so too soon to be sending any major warning signals but worth keeping an eye on over the coming months for signs of potential weakness.