NZD/USD Forms A Steady Downtrend Despite Inflation Remaining Upbeat

It appears that the NZD/USD currency pair has changed course after experiencing a decline for four consecutive days. Yesterday, it received a considerable boost following the release of stronger consumer inflation figures in New Zealand but that move faded quickly after buyers failed to push the price above the 50 SMA (yellow) which has turned into resistance.

The headline CPI (Consumer Price Index) for the second quarter showed a 1.1% increase when it was released in the early hours of the morning, exceeding the estimated 0.9% rise. Additionally, the yearly inflation rate during the reported period decelerated less than expected, coming in at 6%, which prompted investors to anticipate a more hawkish stance from the Reserve Bank of New Zealand (RBNZ) in the month ahead

Furthermore, the prevailing risk-on environment in the markets contributed to the rise of the NZD/USD pair, but the increase stopped below the 50 SMA and we decided to open a sell forex signal here, after a doji candlestick which is a bearish reversing signal after the climb. Overall, the combination of stronger domestic inflation data and the risk appetite in the market sent this forex pair higher, but concerns over China’s slowing economic growth have been increasing lately, which is also playing a part in this bearish momentum in NZD/USD.

In Q2, China experienced a significant deceleration in economic growth, and retail sales slowed notably in June, which weigh on the commodity dollars, including the New Zealand Dollar (NZD). As a result, this pair has formed a consistent downtrend. Overall, the combination of slower growth in China, weaker retail sales, and increased USD demand is driving the NZD/USD pair lower. This is a negative signal for this pair at times when the USD is pretty weak and the economic data from the US is not helping. This means that the decline will pick up pace further when USD buyers return

NZD/USD