Overnight Asia has returned to buying the US dollar, but market activity is below average, keeping the main pairs in the known ranges of fluctuations. The stock market is dominated by increases. The Japanese Nikkei 225 increased by 0.72% and the Chinese Shanghai Composite by 0.5%. Gold is under pressure from the stronger USD and the price drops today to $1,326. The WTI oil is defending itself just under $63 thanks to yesterday's good US inventory data.
On Friday, 23rd of February, the event calendar is quite busy with important data releases, but the market participants should keep an eye on speeches by the Fed's William Dudley, Eric Rosengren, Loretta Mester and John Williams. Before that, the eurozone will release the CPI data, Germany will reveal the GDP data and Canada will post its Consumer Price Index data as well.
NZD/USD analysis for 23/02/2018:
The retail sales data from New Zealand has beaten market expectations by the dynamics of 1.7% q/q versus a 1.4% forecast. In annual terms, sales increased by 5.4%. However, the data did not help much because the market remains under the influence of sentiment for the USD recovery and even after a good data release, the NZD/USD pair went down under 0.7290. Moreover, the uncertain future of risk currencies (in the face of stronger USD) may encourage the reduction of NZD's position, and spill over especially in relation to AUD - the market has been building short positions in the recent days.
Let's now take a look at the NZD/USD technical picture on the various time frames after the news had been released. On the daily time frame, we can see a clear Double Top pattern located at the level of 0.7437 which might suggest a possible reversal of the market. This scenario will be confirmed when the key daily support at the level of 0.7173 is broken. On the H4 time frame, the price has retraced by 38% of the previous leg down and then attempted to rally again, but was capped at the level of 0.7437. Since then it moves in a descending channel that is visible on the H1 time frame. The intraday supports are 0.7286 and 0.7239. The intraday resistance is seen at the level of 0.7364 and 0.7385. In order to rally again, the price must break out of the golden channel first, otherwise, the slow descending consolidation will continue.
