NZD – New Zealand's Latest Inflation Data Increases Chance of Rate Hike Next Month

Data released on Tuesday showed that New Zealand's first-quarter CPI rose 0.9% quarter-on-quarter and remained at 3.1% year-on-year, exceeding the central bank's 1%-3% target range for the second consecutive quarter. While the data only reflects the initial impact of the Iran war, it has already pushed market expectations for a May rate hike from 27% to 45%. Following the data release, the NZD/USD pair rose slightly.

As seen in the technical chart, the NZD/USD pair saw narrower volatility last week, with upward movement clearly limited. It struggled to break through the 0.5950 level, even slipping below 0.5850 on Monday before recovering to above 0.59. Currently, after several days of inability to break higher, there may be some downward pressure, but the pullback is expected to be limited and only a technical correction. Based on the cumulative increase since the low of 0.5680 on April 6th, the 23.6% and 38.2% corrections would be at 0.5870 and 0.5835 respectively, while extended corrections of 50% and 61.8% would be at 0.5805 and 0.5775. A key support level to watch is 0.57. Resistance levels are at 0.5930 and 0.60, followed by 0.6080, and then the next level to watch is the high of 0.6122 from July 1st of last year, and possibly even 0.62.

Forecasted range:
Resistance: 0.5930 - 0.6000* – 0.6080 – 0.6122 – 0.6200
Support: 0.5835 – 0.5805 – 0.5775 – 0.5700

This Week's News Highlights:

21/4 New Zealand's Q1 CPI rose 0.9% quarter-on-quarter, remaining at 3.1% year-on-year.

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