NZDUSD Fundamental Analysis

US

  • The Fed left interest rates unchanged as expected at the last meeting.
  • The macroeconomic projections were revised higher, and the Dot Plot showed that the FOMC still expects another rate hike by the end of the year with less rate cuts projected in 2024.
  • Fed Chair Powell reaffirmed their data dependency but added that they will proceed carefully.
  • The US Core PCE last week came in line with expectations, so the market’s pricing barely changed.
  • The labour market remains pretty resilient but we are starting to see some weakness as Continuing Claims missed expectations once again last week pointing to an upward trend.
  • The US Retail Sales recently beat expectations by a big margin with positive revisions to the prior figures, suggesting the consumers’ spending remains solid.
  • The recent US PMIs showed that the economy now looks more balanced.
  • Fed Chair Powelland other FOMC members continue to highlight the rise in long term yields as doing the job for the Fed and therefore they are expected to keep rates steady this week.
  • The market doesn’t expect the Fed to hike anymore.

New Zealand

  • The RBNZ kept its official cash rate unchanged while stating that demand growth continues to ease and it’s expected to decline further with monetary conditions remaining restrictive.
  • The recent New Zealand inflation data missed expectations supporting the RBNZ’s stance.
  • The latest employment data surprised to the upside.
  • The wage growth has also missed expectations and it’s something that the central banks are watching closely.
  • The Manufacturing PMI continues to slide further into contraction, but the Services PMI jumped back into expansion.
  • The RBNZ is expected to keep the cash rate steady at the next meeting.

NZDUSD Technical Analysis – Daily Timeframe

NZDUSD Technical Analysis
NZDUSD Daily

On the daily chart, we can see that the NZDUSD pair continues to pull back into the key resistance around the 0.5860 level. That’s where we can expect the sellers to step in with a defined risk above the level to position for a drop into new lows. The buyers, on the other hand, will want to see the price breaking higher to increase the bullish bets and start targeting the trendline.

NZDUSD Technical Analysis – 4 hour Timeframe

NZDUSD Technical Analysis
NZDUSD 4 hour

On the 4 hour chart, we can see that the last leg lower was diverging with the MACD, which is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, we are seeing a pullback into the key resistance zone around the 0.5860 level where we can also find the 38.2% Fibonacci retracement level for confluence. This will be a key spot for market participants.

NZDUSD Technical Analysis – 1 hour Timeframe

NZDUSD Technical Analysis
NZDUSD 1 hour

On the 1 hour chart, we can see that we have a short-term bullish trend on this timeframe as the price continues to print higher highs and higher lows. The buyers recently leant on the trendline to position for a rally into the resistance hoping for a breakout. More conservative sellers may want to wait for the price first breaking below the trendline to confirm a bearish continuation and position into new lows.

Upcoming Events

This week, we will get lots of tier one data points with the US labour market and the FOMC decision in focus. Today, we have the US Employment Cost Index, the Consumer Confidence report and the New Zealand Labour Market data. Tomorrow, it will be the time for the US ADP, the ISM Manufacturing PMI, the Job Openings data and the FOMC rate decision. On Thursday we will have the US Jobless Claims data, while on Friday we conclude the week with the US NFP report and the ISM Services PMI.