Fundamental Overview
The USD has been generally under pressure since the benign US CPI report last week as the hawkish expectations subsided and the market switched its focus from inflation back to growth. This triggered a positive risk sentiment with risk assets like stocks and bitcoin gaining ground. Such an environment is generally negative for the greenback and positive for commodity currencies like the NZD.
NZDUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that NZDUSD broke above the trendline following the US CPI report and consolidated around the highs. This has opened the door for a rally into the 0.6217 swing level and should give the buyers more conviction.
NZDUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that from a risk management perspective, the buyers will have a much better risk to reward setup around the upward trendline where they will also find the 50% Fibonacci retracement level for confluence. The sellers, on the other hand, will want to see the price breaking lower to invalidate the bullish setup and position for a drop into the 0.60 handle.
NZDUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we’ve been stuck in a range between the 0.6095 support and 0.6140 resistance. A break to the downside should see the sellers extending the drop into the trendline around the 0.6070 level. On the other hand, a breakout to the upside is unlikely today without a strong catalyst as we have the upper limit of the average daily range right at the resistance.
Upcoming Catalysts
Tomorrow we have the RBNZ policy decision where the central bank is expected to keep everything unchanged. On Thursday, we will get the latest US PMIs and Jobless Claims figures.