USD
- The Fed left interest rates unchanged as expected at the last meeting with basically no change to the statement.
- Fed Chair Powell stressed once again that they are proceeding carefully as the full effects of policy tightening have yet to be felt.
- The recent US CPI missed expectations across the board bringing the expectations for rate cuts forward.
- The labour market is starting to show weakness as Continuing Claims are now rising at a fast pace and the recent NFP report missed across the board. Last week though, the US Jobless Claims beat forecasts by a big margin, although volatility in the data is normal.
- The latest US PMIs came basically in line with expectations with a miss in the Manufacturing index and a beat in the Services measure.
- The recent Fedspeak has been leaning on the hawkish side, but the recent data suggest that the Fed is likely done for the cycle.
- The market doesn’t expect the Fed to hike anymore.
NZD
- The RBNZ kept its official cash rate unchanged at the last meeting while stating that demand growth continues to ease and it’s expected to decline further with monetary conditions remaining restrictive.
- The New Zealand recent inflation data missed expectations supporting the RBNZ’s stance.
- The latest labour market report showed a notable increase in the unemployment rate and a slowdown in wage growth which is something that is likely to keep the RBNZ on the sidelines.
- The Manufacturing PMI fell further into contraction followed by the Services PMI which fell back into contraction.
- The market doesn’t expect the RBNZ to hike anymore.
NZDUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that NZDUSD reached the key resistance zone around the 0.61 handle where we can also find the 50% Fibonacci retracement level for confluence. This is where we can expect the sellers to step in with a defined risk above the resistance to position for a drop back into the lows. The buyers, on the other hand, will want to see the price breaking decisively higher to continue targeting new highs.
NZDUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price has been diverging with the MACD for quite some time right into the key resistance zone. This is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, it might be another confirmation for the sellers that we might see at least a deeper pullback, which is supported further by the rising wedge formation. The first target for the sellers should be the base of the wedge around the 0.5950 level with a further break likely leading to a drop into the 0.5860 level.
NZDUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more closely the price action around the resistance zone and the rising wedge pattern. The buyers should lean on the bottom trendline to position for a rally into new highs. The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets into the 0.5950 level.
Upcoming Events
Today, we will get the latest US Consumer Confidence report and it will be interesting to see how the US consumers see the labour market. Tomorrow, we have the RBNZ rate decision where the central bank is expected to keep rates unchanged. On Thursday, we will see the US PCE and US Jobless Claims data with the market likely focusing more on the latter given that we already saw the latest inflation data with the US CPI report just two weeks ago. Finally, on Friday, we conclude the week with the US ISM Manufacturing PMI which missed expectations by a big margin the last time.