USD

  • The Fed left interest rates unchanged as expected at the last meeting with a shift in the statement that indicated the end of the tightening cycle.
  • The Summary of Economic Projections showed a downward revision to Growth and Core PCE in 2024 while the Unemployment Rate was left unchanged. Moreover, the Dot Plot was revised to show three rate cuts in 2024 compared to just two in the last projection.
  • Fed Chair Powell didn't push back against the strong dovish pricing and even said that they are focused on not making the mistake of holding rates high for too long.
  • The latest US PCE missed expectations across the board with the Core 6-month annualised rate falling below the Fed’s target at 1.9%.
  • The NFP report beat expectations although there was more weakness under the hood.
  • The latest ISM Manufacturing PMI beat expectations, while the ISM Services PMI missed by a big margin.
  • The hawkish Fed members have been leaning on a more neutral side lately.
  • The market expects the Fed to start cutting rates in Q1 2024.

NZD

  • The RBNZ kept its official cash rate unchanged at the last meeting stating that demand growth continues to ease and it’s expected to decline further with monetary conditions remaining restrictive.
  • The New Zealand 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 will keep the RBNZ on the sidelines.
  • The Manufacturing PMI improved although it remains in contractionary territory. The Services PMI, on the other hand, jumped back into expansion.
  • The market expects the RBNZ to start cutting rates in Q2 2024.

NZDUSD Technical Analysis – Daily Timeframe

NZDUSD Technical Analysis
NZDUSD Daily

On the daily chart, we can see that NZDUSD is now trading at a key support zone around the 0.6215 level where we can also find the 50% Fibonacci retracement level for confluence. This is where the buyers are stepping in to target a rally into the 0.64 resistance. The recent break below the trendline might be a bad omen for the buyers though. In fact, if the price breaks below the support, we can expect the sellers to pile in more aggressively and extend the drop into the 0.61 level next.

NZDUSD Technical Analysis – 4 hour Timeframe

NZDUSD Technical Analysis
NZDUSD 4 hour

On the 4 hour chart, we can see more clearly the recent price action. We can notice that the latest leg lower diverged with the MACD, which is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, the buyers piled in to defend the support zone and position for the rally into the 0.64 resistance, but the pair got stuck in a consolidation.

NZDUSD Technical Analysis – 1 hour Timeframe

NZDUSD Technical Analysis
NZDUSD 1 hour

On the 1 hour chart, we can see more closely the price action between the 0.6215 support and the 0.6280 resistance. This rangebound market gives us a clear setup:

  • A break to the upside is likely to lead to a rally into the 0.64 resistance.
  • A break to the downside should trigger a selloff into the 0.61 support.

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Tomorrow we will get the latest US CPI report and the US Jobless Claims figures, while on Friday we conclude the week with the US PPI data.