USD

  • The Fed left interest rates unchanged as expected at the last meeting and dropped the tightening bias in the statement.
  • The US CPI yesterday beat expectations for the second consecutive month but it didn’t change the market’s pricing for rate cuts.
  • The NFP report beat expectations on the headline number, but the unemployment rate and the average hourly earnings missed notably.
  • The latest US ISM Manufacturing PMI missed expectations by a big margin remaining in contraction with the US ISM Services PMI following suit but holding on in expansion.
  • The US Consumer Confidence missed expectations across the board.
  • The market expects the first rate cut in June.

NZD

  • The RBNZ kept its official cash rate unchanged dropping the tightening bias and stating that the OCR will need to remain at restrictive level for a sustained period.
  • The latest 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 than expected 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 bounced on the key 0.6050 support and rallied strongly into the swing level at 0.6218 where the price got rejected from. This is the level that the buyers will need to break to start targeting new highs. The sellers, on the other hand, will likely step in at the swing level again if the price gets there to position for a drop back into the key support targeting a break below it.

NZDUSD Technical Analysis – 4 hour Timeframe

NZDUSD Technical Analysis
NZDUSD 4 hour

On the 4 hour chart, we can see that the price spiked to the downside following the US CPI report and eventually pulled back into the resistance zone around the 0.6160 level where we had the confluence with the red 21 moving average and the downward trendline. This is where the sellers stepped in with a defined risk above the resistance to position for a drop into the key support zone. The buyers, on the other hand, will want to see the price breaking higher to invalidate the bearish setup and position for a break above the 0.6218 level.

NZDUSD Technical Analysis – 1 hour Timeframe

NZDUSD Technical Analysis
NZDUSD 1 hour

On the 1 hour chart, we can see more closely the recent price action with the sellers coming into the market at the resistance zone. If the price were to break below the black counter-trendline we can expect the sellers to increase the bearish bets into the key support zone. The buyers, on the other hand, should lean on the counter-trendline to position for a break above the downward trendline with a better risk to reward setup.

Upcoming Events

Tomorrow we get the US PPI, the US Retail Sales and the US Jobless Claims figures. On Friday, we conclude the week with the New Zealand Manufacturing PMI and later in the day, the University of Michigan Consumer Sentiment survey.