Fundamental Overview
The US Dollar continues to consolidate around the highs as the market reached the peak in the repricing of interest rates expectations and it will need stronger reasons to price out the remaining rate cuts for 2025.
This was signalled by the lack of US Dollar strength after lots of strong US data with the market’s pricing remaining largely unchanged around three rate cuts by the end of 2025. We might see the greenback remaining on the backfoot at least until the US CPI due next week.
Yesterday, Fed’s Waller and Fed’s Williams sounded like a rate cut in December is basically a done deal with the plan to slow the pace of rate cuts considerably in 2025. We will likely need another hot CPI report to force them to skip the December cut.
On the NZD side, the RBNZ cut interest rates by 50 bps as expected recently but overall was less dovish than the market’s aggressive view. Right now, the market sees a 67% chance of a 25 bps cut in February 2025 and a total of 88 bps of easing by the end of next year.
NZDUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that NZDUSD probed above the key resistance zone around the 0.5912 level but eventually failed to sustain the breakout. The buyers will want to see the price breaking higher to increase the bullish bets into the 0.6050 level next. The sellers, on the other hand, will likely continue to step in around the resistance to target a drop into the 0.5773 level.
NZDUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the recent price action formed an inverse head and shoulders. This is generally a signal of a loss in momentum, but the price will need to break above the neckline around the 0.5912 level to potentially trigger a rally into the 0.6050 resistance next.
NZDUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have a minor support zone around the 0.5885 level where the price reacted from several times in the past days. The buyers will likely step in here to position for the break above the resistance. The sellers, on the other hand, will look for a break lower to target a drop into the lows. The red lines define the average daily range for today.
Upcoming Catalysts
Today, we get the US Job Openings data. Tomorrow, we have the US ADP, the US ISM Services PMI and Fed Chair Powell speaking. On Thursday, we get the latest US Jobless Claims figures. Finally, on Friday, we conclude the week with the US NFP report.
