The NZD/USD has seen another wave of volatility the past couple of days as the currency pair has reacted to the shifting tides of behavioral sentiment in global Forex.

• After running upwards last Friday towards a high of nearly 0.62190, and then reversing lower after the U.S jobs numbers were reported the NZD/USD touched a low around 0.61600 on Monday.
• On Tuesday of this week the NZD/USD fired higher again but this time reached only 0.61850 roughly.
• Then the stronger than expected U.S CPI inflation numbers were presented and the NZD/USD sold off again.

(Click on image to enlarge)

The currency pair as of this writing is traversing near the 0.61600 ratio. The volatility in the NZD/USD has been rather strong, but it has occurred in a known range. The past handful of days has seen a price realm consisting between 0.61400 and 0.61850 mostly, but with definite outliers. And before technical traders get to comfortable with their short-term perceptions, there is another U.S inflation report that will be delivered later today that will change the short-term dynamics..

Known Range and Volatility in the NZD/USD

While the NZD/USD has certainly produced swings in price value, the intriguing thing about Tuesday’s high in the currency pair as Consumer Price Index statistics were about to be printed is the fact that values did not challenge last Friday’s apex numbers. Financial institutions having been blindsided by last month’s CPI reports, which came in stronger than anticipated likely were extra cautious going into Tuesday’s publication. Careful traders were proven correct when U.S data came in slightly higher than expected via the inflation results again.

The NZD/USD is currently traversing a rather sideways trading pattern and this is an indication that financial houses are waiting on today’s Producer Price Index and Retail Sales reports from the U.S with conservative outlooks. The 0.61600 ratio is likely to become a rather interesting barometer in the short-term as speculators position before the important U.S data.

Stubborn U.S Inflation and Choppy Range in the NZD/USD

If the PPI report comes in higher than expected today this would cause selling in the NZD/USD to likely be demonstrated. U.S economic data has been mixed and the inflation numbers are the main culprit causing cloudy outlooks regarding just how much the Federal Reserve is going to be able to change its monetary policy path over the mid-term and the remainder of this year.

• Weaker inflation results from the Producer Price Index today could spur on buying of the NZD/USD and a potential retest of the 0.62000 level.
• Traders who are pursuing the NZD/USD before the U.S data releases should use strict risk management, because the price range of the currency pair will dance quickly again.
• The near-term could provide speculative opportunities, but careful leverage needs to be used.

NZD/USD Short Term Outlook:

• Current Resistance: 0.61670
• Current Support: 0.61550
• High Target: 0.62060
• Low Target: 0.60890

More By This Author: