Fundamental Overview
The USD has been generally under pressure since the benign US CPI report last week as the hawkish expectations subsided and the market switched its focus from inflation back to growth. This triggered a positive risk sentiment which is generally negative for the greenback and benefited the other major currencies.
The NZD, on the other hand, got a boost today from a 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 should remain supported amid the positive risk sentiment and a hawkish RBNZ for the time being.
NZDUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that NZDUSD broke above the trendline recently following the US CPI report and consolidated around the highs. This has opened the door for a rally into the 0.6217 swing level and should give the buyers more conviction especially after the hawkish RBNZ decision.
NZDUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that from a risk management perspective, the buyers will have a good risk to reward setup around the upward trendline where they will also find the 50% Fibonacci retracement level for confluence. The sellers, on the other hand, will want to see the price breaking lower to invalidate the bullish setup and position for a drop into the 0.60 handle.
NZDUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we’ve been stuck in a range between the 0.6095 support and 0.6140 resistance. Another breakout to the upside should see the buyers piling in more aggressively to extend the rally into the 0.6217 level although it’s unlikely that we will see it today as we have the upper limit of the average daily range right at the resistance.
The FOMC Minutes or the US PMIs might boost the USD in the short term and provide a dip-buying opportunity as long as there are no worrying inflationary comments in the PMIs.
Upcoming Catalysts
Today we have the FOMC Minutes late in the day although it’s unlikely to be market moving. Tomorrow, we will get the New Zealand Q1 Retail Sales, the US PMIs and the latest US Jobless Claims figures.
