The last week, the miss in the US CPI report has led to a big US Dollar selling across the board as the market expected the Fed to be finished with rate hikes after the July meeting. The resilience in the labour market and the rising consumer sentiment have also led to expectations that the US can really achieve a soft-landing, and this led to a positive risk sentiment in the markets. The RBNZ, on the other hand, kept its official cash rate unchanged while stating that it will remain at the restrictive level for the foreseeable future to ensure that inflation comes down back to target.
NZDUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that after rallying into the key 0.6389 resistance, the price was overstretched from the blue 8 moving average. In such instances, we can generally see some consolidation or a pullback into the moving average before the next move. In fact, the price has now pulled back into the moving average and the previous swing level at 0.6305 where we are likely to see a bounce.
NZDUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that at the 0.63 round level we have also the 38.2% Fibonacci retracement level of the entire upward move from the 0.6133 level. The buyers should step in here with a defined risk below the level and target the break above the 0.6389. The sellers, on the other hand, will want to see the price to break below the 0.63 handle to increase the selling pressure and target the 0.60 handle.
NZDUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the we had recently a rejection from the 0.6344 level. This will be an important minor resistance. A break above it would confirm the bounce from the 0.63 handle and lead to more buying pressure. The last line of defence for the buyers will be the broken trendline as a move below it would see the sellers in control.
Upcoming Events
Today the market will be particularly focused on the US Retail Sales data. There’s a high chance that the USD will be pressured on multiple scenarios though. In fact, good data should reinforce the soft-landing narrative, while a little miss may indicate a healthy softening that is going to help easing prices. Only a big miss may give the USD a tailwind as the market sentiment would switch into risk off. Another important report will be the US Jobless Claims on Thursday as the market keeps an eye on the labour market.
