Fundamental Overview
The bullish momentum in the US Dollar seems to be waning despite the recent higher-than-expected US CPI and PPI reports. One caveat is that the market has now priced out the aggressive rate cuts expectations and it’s almost perfectly in line with the Fed’s projections.
Therefore, we will likely need more strong US data to see the market pricing in an earlier pause in the Fed’s easing cycle and give the US Dollar a further boost.
In the bigger picture, it looks like the US long term yields are bound to rise further, which should keep the recent uptrend in the USD intact, but more bullish catalysts for the greenback would give more conviction for the buyers.
The next big risk events will be in November when we get the October data and the US election.
On the NZD side, the RBNZ recently cut interest rates by 50 bps as expected. The market is pricing an 88% probability of another back-to-back 50 bps cut in November.
NZDUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that NZDUSD is consolidating around the key 0.6050 support zone. This is where we can expect the buyers to step in with a defined risk below the support to position for a rally into the 0.6217 resistance. The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets into the 0.5850 support next.
NZDUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see more clearly the rangebound price action as the bearish momentum waned. We have the 0.61 handle acting as resistance here so a break above it will likely see the buyers increase the bullish momentum into the 0.6217 resistance.
NZDUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, there’s not much more we can glean from this timeframe as the market participants will likely keep on playing the range until we get a breakout. Watch out for the New Zealand CPI later in the day. The red lines define the average daily range for today.
Upcoming Catalysts
This week is pretty empty on the data front with just a couple of key economic releases. Today, we get the New Zealand Q3 CPI report. On Thursday, we have the US Retail Sales and US Jobless Claims data.
