NZDUSD Technical Analysis

The recent beat in the non-farm payrolls (NFP) data, followed by concerning factors like a higher unemployment rate and fewer average weekly hours, has resulted in a weakening of the USD. The market has adjusted its hawkish expectations to less hawkish ones because a looser job market can help reduce inflation. Additionally, the disappointment in the ISM Services Purchasing Managers' Index (PMI), particularly in the lower prices paid sub-index, has further contributed to the expectations that 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 may soon start to normalise.

The significant miss in US jobless claims was taken with a grain of salt due to seasonal adjustments. Continuing claims have shown even greater improvement, indicating that people are finding jobs relatively quickly after being unemployed. Overall, the strong hawkish sentiment observed in May due to positive economic data has recently started to reverse. This change in sentiment occurred as Federal Reserve members expressed a preference to hold off on major actions during the upcoming Federal Open Market Committee (FOMC) meeting and the misses in the data.

NZDUSD Technical Analysis – Daily Timeframe

On the daily chart, we can see that the big reversal in hawkish expectations for the June FOMC meeting led the NZDUSD to pullback into the downward trendline where we can also find the red 21 moving average. This is a key resistance level and we will likely see the sellers leaning on this trendline to position for a selloff towards the previous low at 0.6000. The buyers will need to break above the trendline to extend the rally to new highs.

NZDUSD Technical Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that we also have some confluence from the 50% Fibonacci retracement level and the psychological 0.6150 level. This is a good spot for the sellers to position for more downside from here. The buyers will need to break above the trendline to get the conviction to target new highs.

NZDUSD Technical Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that the price is diverging with the MACD trading into the trendline. This is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, a divergence here may be significant and increases the odds of the bearish setup. Anyway, today’s data will decide where the NZDUSD will go next.

This week is packed with many significant events, starting with the release of the US Consumer Price Index (CPI) report today. This report is expected to strongly influence expectations for tomorrow's Federal Open Market Committee (FOMC) rate decision and the next meetings. The most straightforward scenarios are likely to be a rally in the NZDUSD pair if the CPI data misses across the board and a selloff in case the data beats on all fronts. The market is likely to pay more attention to the Core CPI, making it the most critical measure to monitor.

Moving on to later in the week, we have the release of the Jobless Claims report and the University of Michigan consumer sentiment survey. During the previous release of the consumer sentiment survey, there was a substantial rise in long-term inflation expectations, which significantly impacted the market. Consequently, if this survey fails to meet expectations, it would be viewed as positive news for NZDUSD.