Inflation is the undisputed word-of-the-day. In addition to the U.S. CPI report coming in above expectations, the Reserve Bank Of New Zealand (RBNZ) brought its own early session surprise. The RBNZ Inflation Expectations came in at 2.1%, over the projected 2.0%.

Talk of inflation spikes forex volatility. After a period of prolonged rotation, the NZD/USD looks to be on the verge of breaking out from key support/resistance levels.

NZD/USD Technicals

In an update from Tuesday, I outlined a rotational trading plan for the Kiwi. Several winning trades have been available, with the past 3 hours bringing the volatility needed to break from consolidation. Timing is everything in trading, so if you grabbed a few green pips from the action earlier, well done!

The market dynamic is shifting for the Kiwi. Price is extending past topside resistance at the Daily SMA. As of now, the bulls appear poised to challenge the Swing High of .7435.

Bottom Line: It is too early to tell whether or not we will see a full-blown trend day up. The failed auction beneath Tuesday’s low and break above resistance lend credence to the bulls winning the session.

For the remainder of the week, I will have sell orders in from the double-top area of .7415 to .7424 with an initial stop loss at .7456. Exact entry will vary, but shorts from this level should produce 30+ pips using a 1:1 R/R management scenario.