NZD/USD bulls seek a break of the key daily resistance
- NZD/USD meets a critical resistance area for the start of the week.
- Breas are lurking for a downside continuation while the focus stays on the theme of the relation.
NZD/USD is starting the day flat in a quiet beginning to the week while investors concentrate on what may come of a mix of conflicting US and global data vs reflationary prospects. NZD/USD is currently trading at 0.7247 between a range of 0.732/48.
The greenback has been the focus as it edged lower against major currencies on the last trading day of the week. The report that US Retail Sales unexpectedly stalled in April due to the fears of accelerating inflation receding is a double-sided sword in that inflation is at height vs poorer data. On Friday, the Commerce Department said that Retail Sales were unchanged in April after recording a 10.7% surge in March, but this was boosted by stimulus checks.
All in all, however, investors expect another acceleration in such data as US Retail Sales because the global recovery is being priced in as inevitable as leading nations, such as the US economy, reopen and populations spend the savings they have been amassing.
Domestically, the New Zealand economy is regaining momentum as well after a soft patch over the summer months as evident in the latest electronic card spending that printed strong for April, while housing market data remained perky.
NZD/USD technical analysis
Meanwhile, from a technical perspective, the price has made a full retracement to the neckline of the M-formation.
This means that the next day or so is critical.
A break of the neckline will be highly bullish, but a correction from here will be bearish.
