The Fed’s preferred inflation measure is up for release soon, so will the dollar resume its rally on another pickup in price pressures?
If so, this neat area of interest on NZD/USD might hold as resistance.
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
- U.S. gov’t infrastructure plans spurs risk-on moves for stocks
- Fed official Barkin: U.S. not yet at full employment, inflation temporary
- Tokyo core CPI stayed flat instead of dipping by 0.1% as expected
- Asian shares wobble ahead of U.S. core PCE and personal spending reports
Upcoming Potential Catalysts on the Economic Calendar:
- U.S. core PCE price index at 12:30 pm GMT
- U.S. personal spending and income at 12:30 pm GMT
- Chinese CB leading index at 1:00 pm GMT
- U.S. UoM revised consumer sentiment index and inflation expectations at 2:00 pm GMT
What to Watch: NZD/USD
Uncle Sam is scheduled to print a fresh reading for the core PCE price index, which is said to be the central bank’s preferred inflation measure.
Keep in mind that market watchers are paying extra close attention to U.S. inflation data, as this could determine whether or not the Fed is getting closer to tapering.Analysts are predicting slightly weaker price pressures at 0.6% for May versus the earlier 0.7% gain, but an upside surprise might still be enough to revive hawkish policy vibes.
If that’s the case, NZD/USD could find sellers at the strong area of interest visible on the 1-hour time frame.
The pair has formed lower highs connected by a falling trend line, which happens to be close to the 61.8% Fibonacci retracement level. Holding as a ceiling could send the price back to the swing low at .6922 or lower.
Selling pressure is in play, according to the Stochastic oscillator, while the 100 SMA below the 200 SMA also suggests that resistance is more likely to hold than to break.Just be mindful, though, that the gap between the moving averages is narrowing to reflect weakening bearish momentum and a potential crossover.
A significant downside surprise in the U.S. core PCE price index might underscore Fed head Powell’s downplaying of tightening prospects. This could be enough to send NZD/USD above the trend line resistance and onto a reversal, so watch out!
