Fundamental Overview
The USD yesterday came under pressure following the miss in the US ISM Manufacturing PMI which triggered a drop in Treasury yields. In terms of market pricing, not much has changed as we still oscillate between one and two rate cuts by the end of the year. Nonetheless, the data reinforced the narrative that the next move is more likely to be a rate cut, and that inflation is likely to keep coming back to target.
The NZD, on the other hand, remains supported from the hawkish RBNZ decision where the central bank pushed further out the timing for a rate cut and even added that they considered a rate hike. The currency has also been supported by the positive risk sentiment in the markets which is generally good for commodity currencies like the NZD, so if it this were to continue, we should see the Kiwi reach new highs.
NZDUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that NZDUSD remains in a solid uptrend amid an overall positive risk sentiment regime due to lower inflation fears and resilient growth. The price today pulled back a bit as we got some risk-off flows in the European session although they weren’t caused by a fundamental catalyst, so we might see them fading in the US session.
NZDUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price pulled back into a trendline where we got a rejection as the buyers stepped in with a defined risk below it to position for the continuation of the uptrend. The sellers will want to see the price breaking lower to turn the bias more bearish and pile in for a drop into the 0.6082 support.
NZDUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have the 61.8% Fibonacci retracement level adding extra confluence to the trendline support. Moreover, we can see that the price reacted several times to the zone around the 0.6170 level, so a break above it should give the buyers more conviction for a rally and increase the bullish momentum. The sellers, on the other hand, will want to see the zone holding and the price falling below the trendline to pile in with more conviction into new lows. The red lines define the average daily range for today.
Upcoming Catalysts
Today we have the US Job Openings data. Tomorrow, we have the US ADP and the US ISM Services PMI. On Thursday, we get the latest US Jobless Claims figures, while on Friday we conclude the week with the US NFP report.
