On the daily chart below, we can see that the NZDUSD couldn’t break the 0.6389 resistance and sold off as US economic data started to come in better than expected. The market has been pretty confident that the Fed would pause at the June meeting, but the Fed left a door open for another hike if the data indicated such a move. In fact, strong economic reports made the market to slowly come to the idea that the Fed may not be done yet.

Yesterday, we got again good US PMIs where the manufacturing part contracted more than expected but the services one exploded to the upside. It's worth remembering that today’s economy is 80% services oriented, and that may keep core inflation Inflation Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is m Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is m Read this Term higher for longer. On the other hand, the RBNZ today hiked by 25 bps as expected and signalled a pause which sent the NZD/USD lower.

NZDUSD Technical Analysis

On the 4 hour chart below, we can see that after the first big selloff following the upward trendline breakout, the NZD/USD pulled back markedly into the 61.8% Fibonacci retracement level at the 0.63 handle. After a double top, the price started to roll over and eventually cratered as the RBNZ signalled a pause today. The target on the downside should be the low at 0.6084, but we might see a pullback first after such a strong move lower.

On the 1 hour chart below, we can see how the price broke below the neckline of the double top, retested it and then moved lower into the RBNZ rate decision. The NZD/USD broke below the previous swing low at 0.6181 but the selling momentum seems to be waning.

From a risk management perspective, the sellers should wait for a pullback into the 0.6181 level to have a better risk to reward setup. The buyers, on the other hand, should wait for a break above the swing low at 0.62 to have more conviction on a move towards the 0.63 handle.