Fundamental Overview
Yesterday, we got two strong US data releases as the Jobless Claims and Retail Sales figures came out much better than expected. The initial reaction was US Dollar bullish, but after a while the market started to fade the move.
The reason is that the risk-on sentiment is generally negative for the greenback as the market focuses on positive global growth. Of course, the reasons to sell the USD are not that strong and that’s why in the big picture the major currency pairs have been mostly trading in a range for a year.
But in the short term, the changes in sentiment are influencing the price action and the US Dollar performance.
On the NZD side, this week the RBNZ cut rates by 25 bps. While analysts and economist were expecting the OCR to remain unchanged, the market was pricing more than a 70% probability of a rate cut nonetheless, so it wasn’t such a big surprise.
What weighed on the Kiwi were more dovish than expected central bank’s forecasts for future interest rates settings.
NZDUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that NZDUSD probed above the key resistance zone this week around the 0.6050 level but got smacked back down following the rate cut from the RBNZ. The buyers found support around the 0.5980 level and started to pile in following the much better than expected US data.
A break above the 0.6050 resistance should see the buyers increasing the bullish bets into the 0.6217 level. The sellers, on the other hand, should step back in around the resistance to position for a drop into the 0.5850 level next.
NZDUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see more clearly the bounce from the minor support zone around the 0.5980 level where the price got rejected from several times in the past weeks. The sellers will want to see the price breaking below that level to increase the bearish bets into the 0.5850 level.
NZDUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have the upper bound of the average daily range for today standing right around the key resistance zone. Therefore, it’s unlikely that we will get a breakout today unless the US data today comes out very strong.
Upcoming Catalysts
Today we conclude the week with the University of Michigan Consumer Sentiment survey.
