The Fed hiked interest rates by 25 bps as expected and kept everything unchanged. Fed Chair Powell reaffirmed their data dependency and kept all the options on the table. The US data since the FOMC meeting has been supporting the soft-landing narrative as the labour market indicators remained strong while the inflation data missed expectations.
The RBNZ, on the other hand, kept its official cash rate unchanged while stating that it will remain at the restrictive level for the foreseeable future to ensure that inflation comes down back to target. The recent New Zealand inflation data though surprised to the upside which might put some pressure on the central bank at the next rate decision, although they are more likely to keep rates steady.
NZDUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that NZDUSD has sold off heavily since the tap into the key 0.6389 resistance. The target for the sellers should be the 0.5987 low, but we will need more strong US data to keep the bearish momentum going.
NZDUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we are starting to see a divergence with the MACD which is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, we might see a deeper pullback into the downward trendline where we can also find the 61.8% Fibonacci retracement level. The sellers are likely to step in there with a defined risk above the trendline to target the low. The buyers, on the other hand, will want to see the price breaking above the trendline to increase their conviction and target the 0.6389 resistance again.
NZDUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have another strong short-term resistance zone at the minor trendline where there’s confluence with the previous swing low level, the 50% Fibonacci retracement level and the red 21 moving average. Aggressive sellers may step in here already to target another selloff into the low. The buyers, on the other hand, will pile in more aggressively if the price breaks above the trendline and target the break above the major trendline.
Upcoming Events
Today we have the US ADP report, which is a less reliable labour market indicator, but it can be a market moving piece of data. Tomorrow, the market will focus on the US Jobless Claims and the ISM Services PMI. On Friday, we will finally see the latest US NFP report. Strong data should support the US Dollar, while weak readings are likely to weigh on the greenback.
