AUD/NZD Technical Analysis: Bears Dominates Amid Declining Australian Inflation Data

New Zealand – Trade Balance

Later, at GMT 10:45 p.m., the Statistics New Zealand released the national trade balance figure, which measures the difference of the value between net import and net export of the country during the previous month.

Since the export of a country is directly correlated to the demand for its currency, a positive trade balance figure indicates that foreigners had to buy more local (NZD) currency in exchange of their domestic currency. Hence, binary options traders consider the trade balance to be an important indicator of the health of the New Zealand’s economy.

Last month, the trade balance figure of New Zealand came out at $367 million, and this month the forecast was set a much better figure, at $405 million. However, the actual figure came out at only $117 million.

Australia – Consumer Price Index

Tomorrow, at GMT 1:30 a.m., the Australian Bureau of Statistics released the quarter-over-quarter consumer price index (CPI) figure that measures the changes in the price of goods and services bought by Australian consumers in the last quarter.

Since the consumer price index is primarily used by the Australian central bank to measure inflation, any significant change in the CPI often makes the Forex market extremely volatile. Also, as the inflation at the retail level has a big influence on the central bank’s future monetary policy. Hence, it is considered by binary options investors to be a leading indicator of the Australian economy.

Last quarter, the Australian consumer price index increased by 0.4%, and the forecast for this quarter was set at an additional increase of 0.3%. However, the actual data indicated that the Australian CPI decreased by at 0.2% instead.

Trade Recommendation for the AUD/NZD

AUD/NZD Technical analysis

Since the middle of February, the AUD/NZD mostly remained bullish and the price reached as high as 1.1333 on March 23. But, since then, the AUD/NZD stayed in a close range. During this range bound period, the pair has also managed to break the uptrend line.

As the Australian inflation figure came out negative 0.2% against a forecast of positive 0.3%, the market perceived it as a weakness in the Australian economy. As a result, today, the AUD/NZD price has fallen by around 185 pips so far and if the bearish momentum continues, it will likely fall towards the support around the 38.2% Fibonacci retracement level of the previous upward swing.

We believe the AUD/NZD will find some good support around this level. But, if this support level at 1.1040 is broken, then there is a chance that the bearish momentum will push the price further down in the next few days.

Under the circumstances, it would be recommended that binary options traders consider placing a PUT order for the AUD/NZD with their binary options brokers once the price closes below the 1.1040 level.

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