The NZD/USD is struggling today after relatively mixed economic data from New Zealand. The NZDUSD is trading at 0.7193, which is a few pips below its year-to-date high of 0.7317.
What happened: In a report earlier today, the New Zealand bureau of statistics said that the country’s headline consumer price rose by an annualised rate of 1.4% in the fourth quarter. That was better than the expected increase of 1.0%. On a quarter-on-quarter basis, the CPI rose by 0.5%, lower than the previous increase of 0.7%.
The NZD/USD possibly declined because of the weak PMI data released by Business NZ. The number showed that the PMI fell from the expansionary zone of 55.3 in December to 48.7. A PMI number of 50 and below is usually a sign of contraction. Nonetheless, the New Zealand economy is in a relatively strong shape judging by the recent electronic retail sales numbers.
The NZD/USD pair has been on a strong upward trend in the past few months as shown on the daily chart below. It is also above the 25-day and 15-day exponential moving average. Most importantly, the pair has been forming a rising wedge pattern. Also, the Relative Strength Index (RSI) has formed a bearish divergence pattern.
Therefore, while the uptrend could go on for a few weeks, there is a possibility that it will resume a new downtrend. If this happens, the next level to watch will be the psychological level of 0.700.