Fundamental Overview
The USD continues to remain under pressure amid positive risk sentiment and the imminent rate cuts from the Fed which should help global growth. These are generally bearish drivers for the greenback.
In fact, the recent strong appreciation of the NZD has been mostly driven by the US Dollar side of the equation. After the recent more dovish than expected RBNZ decision, the market is pricing a 95% probability of a rate cut in October and then at least another 25 bps cut before year-end.
The focus now will be on tomorrow’s Flash US PMIs and then Fed Chair Powell speech at the Jackson Hole Symposium on Friday.
NZDUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that NZDUSD broke above the key resistance zone around the 0.6050 for good this time and extended the gains into the 0.6150 level. This is where we can expect the sellers to step in with a defined risk above the level to position for a drop back into the 0.6050 support. The buyers, on the other hand, will want to see the price breaking higher to increase the bullish bets into the 0.6217 resistance.
NZDUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have a very strong support zone around the 0.6050 level where we can find the confluence of the trendline and the 61.8% Fibonacci retracement level. If the price were to get there, we can expect the buyers to step in with a defined risk below the support to position for a rally into new highs with a better risk to reward setup. The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets into new lows.
NZDUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we broke below a minor upward trendline today which was defining the bullish momentum since the 0.60 handle. This could be a signal of waning momentum, so the buyers will likely wait for a bigger pullback or a catalyst before resuming the uptrend. The red lines define the average daily range for today.
Upcoming Catalysts
Tomorrow we get the US Jobless Claims and US PMIs. On Friday we conclude the week with Fed Chair Powell speaking at the Jackson Hole Symposium.
