The last week, the miss in the US CPI report has led to a big US Dollar selling across the board as the market expected the Fed to be finished with rate hikes after the July meeting. The USD started to come back to life though as strong economic data suggested that the Fed may not be finished yet and may stay at a higher level for longer than the market expects. In fact, the US retail sales beat expectations on the Control Group, which is seen as a better gauge of consumer spending, and yesterday the US initial claims were much better than expected returning near the record low levels.
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 and the next rate decision.
NZDUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that NZDUSD sold off pretty heavily from the key 0.6389 resistance and erased all the USD weakness following the miss in the US CPI report. The price is now testing the red 21 moving average and the 61.8% Fibonacci retracement level where we should find some buyers stepping in to target another rally into the key resistance level.
NZDUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have a very good support zone between the 0.62 handle and the 61.8% Fibonacci retracement level. This is where the buyers should step in with a defined risk below the Fibonacci level and target an extension to the 0.6389 resistance. The sellers, on the other hand, will want to see the price breaking below the Fibonacci support to pile in even more aggressively and extend the fall into the 0.5987 support.
NZDUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the price is now testing the Fibonacci retracement level where we should see the buyers stepping in. Before reaching the key resistance, the buyers will need to break above the strong 0.63 handle, where we should find the sellers piling in to target a fall into the support level again and ultimately a break below it. If the price falls below this support zone without a pullback, we should see the sellers piling in even more aggressively and extend the fall into the 0.5987 support.
