Last week the Fed opted to pause its tightening cycle, maintaining interest rates at 5.00-5.25%. The decision was driven by their intention to accumulate additional economic data before making further determinations regarding rate hikes. Their goal is to find the optimal level of policy restraint that can effectively bring inflation down to their target of 2% without triggering a severe recession.
Up until now, the economic data in the United States has been encouraging, particularly within the housing sector. Since the Federal Reserve initiated the process of scaling back its rate hikes in December 2022, the housing market has exhibited significant strength. It is possible that this robust performance has contributed to the recent strength seen in the USD.
NZDUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that NZDUSD couldn’t sustain the breakout above the 0.6182 resistance and pulled back. The price should now find some support at the red 21 moving average where the buyers should position for another extension to the upside.
NZDUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that besides the daily 21 moving average we also have a previous swing high resistance at 0.61 and the 50% Fibonacci retracement level. The buyers should lean on this support zone with a defined risk below 0.6084 and target the 0.63 handle. The sellers, on the other hand, may want to wait for the price to break below the 0.6084 to pile in and extend the fall into the 0.5987.
NZDUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the sellers can also lean on the trendline for more shorts where they can also find the red 21 moving average for confluence. The buyers, on the other hand, may wait for the price to break above the trendline to pile in and target more higher highs.
Today we will see the US PMIs and we can expect more downside for the pair if the data surprises to the upside as the market would price more hikes, conversely if the data misses expectations we may see more upside as the market would price in less hikes.
