USD

  • The Fed left interest rates unchanged as expected at the last meeting while dropping the tightening bias in the statement but adding a slight pushback against a March rate cut.
  • Fed Chair Powell stressed that they want to see more evidence of inflation falling back to target and that a rate cut in March is not their base case.
  • The US CPI beat expectations for the second consecutive month with the disinflationary trend reversing.
  • The US PPI beat expectations across the board by a big margin.
  • The US Initial Claims beat expectations while Continuing Claims missed. Overall, the data remains steady.
  • The ISM Manufacturing PMI surprised to the upside with the new orders index, which is considered a leading indicator, jumping back into expansion. Similarly, the ISM Services PMI beat expectations across the board with the employment sub-index erasing the prior drop and prices paid jumping above 60.
  • The US Retail Sales missed expectations across the board by a big margin.
  • The market now expects the first rate cut in June.

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 printed in line with expectations supporting the RBNZ’s patient stance.
  • The labour market report beat expectations across the board with lower unemployment rate and higher wage growth.
  • The Manufacturing PMI improved in January remaining in contraction while the Services PMI jumped back into expansion.
  • The market expects the first cut in August.

NZDUSD Technical Analysis – Daily Timeframe

NZDUSD Technical Analysis
NZDUSD Daily

On the daily chart, we can see that NZDUSD has been rallying steadily since bouncing on the key support around the 0.6050 level. The price recently broke above a key resistance around the 0.6160 level where we had also the 38.2% Fibonacci retracement level for confluence. The buyers should now start targeting the 0.64 handle while the sellers will need some key breaks on the lower timeframes to gain back some conviction for new lows.

NZDUSD Technical Analysis – 4 hour Timeframe

NZDUSD Technical Analysis
NZDUSD 4 hour

On the 4 hour chart, we can see more clearly the key resistance zone around the 0.6160 level. In case of a retest of the broken resistance now turned support, we can expect the buyers to step in with a defined risk below the zone to position for a rally into the 0.64 handle. The sellers, on the other hand, will want to see the price breaking lower to invalidate the bullish setup and pile in for a drop back into the lows.

NZDUSD Technical Analysis – 1 hour Timeframe

NZDUSD Technical Analysis
NZDUSD 1 hour

On the 1 hour chart, we can see that the latest leg higher diverged with the MACD which is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, it should be a signal for a pullback into the support where the buyers will also find the trendline for confluence. If the price were to break lower though, the reversal would be confirmed, and the sellers will likely pile in more aggressively to target new lows.

Upcoming Events

Today we have the FOMC Meeting Minutes on the agenda while tomorrow we will see the latest US Jobless Claims figures and US PMIs.