The Fed is waiting for the totality of the data to be released before deciding what to do at their September meeting. As of now, the data supports the soft-landing narrative as the disinflation in the core measures continues but the strength in the labour market and consumer spending might keep inflation higher for longer. This is something that might translate into more rate hikes or a “higher for longer-er” stance. Recently the long-term Treasury yields have been rising non-stop and this has benefited the US Dollar but the reason for such a rally is still unclear.
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 and employment data surprised to the upside but the PMIs are in contraction with the Services PMI this week plunging into contraction. The wage growth has also missed expectations and it’s something that the central banks are watching closely for second round effects.
NZDUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that NZDUSD just keeps on falling with very shallow pullbacks. The breakout of the 0.5987 low has also opened the door for a fall into the 2022 low at 0.5514. The pair remains in a “sell on rallies” mode as the trend is clearly bearish with the price printing lower lows and lower highs and the moving averages crossed to the downside.
NZDUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we’ve been diverging with the MACD for a while which is a sign of weakening momentum often followed by pullbacks or reversals. In this case, if we get a pullback, there will be a strong resistance at the previous support turned resistance where we can also find the trendline and 38.2% Fibonacci retracement level. This is where the sellers are likely to pile in with a defined risk above the trendline and target the 0.5514 low.
NZDUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have a divergence even on this shorter timeframe as the pair becomes more and more oversold. The resistance is highlighted by the blue zone and the buyers will need to break above it and extend the rally past the trendline to have more conviction for a return towards the highs.