FxWirePro: NZD/USD finds strong support at 200-DMA, weakness only on break below

Fundamental Factors:

• NZD has shown signs of recovering early in the New Year and remains positive over the short-term.
• Data released in the US yesterday showed inflation rose at a fastest pace in five years. 
• Higher inflation could force the Fed to hike rates at a faster rate, unless wage growth keeps up with rising costs.
• Bid tone around the US dollar strengthened in the late North American session following Yellen’s hawkish comments.
• New Zealand’s residential consents fall sharply in November. NZ housing consents dropped 9.2 percent sequentially in November after a revised 2 percent rise in October.
• New Zealand’s annual inflation due 26th Jan will be another major influential factor.
• ANZ forecasts NZ CPI to lift to 1.2% – back in the RBNZ’s target band for the first time since Q3 2014.

Technical Analysis:

• NZD/USD slumped nearly 100 pips overnight after hawkish Yellen's comments.
• The pair is attempting a minor recovery and is currently hovering around 0.7144, up from lows of 0.7117.
• We see strong support by 200-DMA at 0.7089, break below could see further weakness.
• Price action has slipped below daily cloud, which nows acts as resistance.
• Death cross on daily charts and 'Bearish Cypher Pattern' raise scope for downside.

Support levels - 0.71 (38.2% Fib of 0.7485 to 0.6862 fall), 0.7089 (200-DMA), 0.7070 (Double bottom - Jan 13 & dec 5)

Resistance levels - 0.7168 (cloud base), 0.7173 (50% Fib), 0.7187 (cloud top)

Recommendation: Good to go long on dips around 0.7130/40, SL: 0.7089, TP: 0.72/ 0.7220/ 0.7245/ 0.7265