Chinese easing boost to Kiwi might evaporate fast

New Zealand Dollar bulls are in extremely vulnerable positions hanging just below resistance.

• New Zealand dollar is up against USD today - 0.72%.
  
  
• Most of the gains came from gap up open. Today's range so far 0.7700 - .7723, or just 23 pips.
  
  
• Low volume Monday with low volatility at crucial juncture - a perfect recipe for big move.

Why Kiwi will struggle to the upside?

Technical -

• Last Friday Kiwi-dollar pair produced bearish inverted hammer candle at important resistance level.
  
  
• Chinese reserve requirement ratio (RRR) cut gave kiwi sentimental boost, however concern remain over China continue to persist. Moreover the boost so far failed to clear up the bears around inverted hammer high around 0.775.

Fundamental -

• New Zealand economy is strong, however Central bank remains concerned over weakening inflation outlook and disinflationary pressure.
  
  
• Release over the weekend registered another drop in inflation. CPI dropped -0.3% q/q and grew only 0.1% y/y compared to 0.8% earlier.

Risk reward seems very favorable to enter Kiwi short trades. Resistance of 0.7760, 0.7810, and 0.792 can be considered as stops.