The NZD/USD rallied and reached new highs today, but wasn’t able to stay there and now is located right below some important dynamic resistance levels. Price has shown some exhaustion signs and could start another minor correction if the USDX will have enough energy to climb above the 93.81 static resistance.

The USD has taken the lead in the second part and has recovered versus the Kiwi after the morning drop as the United States data has come in mixed. Technically, the NZD/USD is somehow expected to drop on the short term after the retest of a very strong dynamic resistance, but remains to see what will really happen on the dollar index.

The Kiwi rallied in the morning as the New Zealand CPI increased by 0.5%, beating the 0.4% estimate and the 0.0% growth in the former reading period.

The USD increased even if the Capacity Utilization Rate has disappointed, the indicator was reported at 76.0%, lower versus the 76.2% estimate, but has received support from the Import Prices, which have increased by 0.7%, more versus 0.6% estimate. The Industrial Production increased by 0.3%, matching expectations, while the NAHB Housing Market Index increased from 64 to 68 points, beating the 64 estimate.

Price reached and retested the fifth warning line (wl5) of the ascending pitchfork, but failed to stay near this dynamic obstacle and above the 50% Fibonacci level, signaling that the bears are still in the game. I’ve said in the last weeks that the price could develop a Falling Wedge pattern, but it could still drop towards the 61.8% retracement level before will decide what will do next.

The perspective remains bearish as long as is trapped within the down channel between the WL3 and the WL2. Only a valid breakout above the WL3 of the former descending pitchfork

Price will increase again if the USDX will fail to reach the 93.81 static resistance, personally, I’m a little skeptical about a further increase of the USDX without a minor drop.