Fundamental Overview
Since last Friday, the USD has been mostly weak as Fed Chair Powell delivered a more dovish than expected speech at the Jackson Hole Symposium where he basically kept the door open for a 50 bps cut at the September meeting. In fact, the line saying that they will do everything they can to support a strong labour market was key.
That pushed Treasury yields lower and weighed on the greenback across the board. In fact, the recent appreciation of the NZD has been mostly driven by the US Dollar side of the equation. The more dovish RBNZ has been put aside from the market’s focus.The central bank is expected to cut rates by 25 bps at the October meeting and deliver a total of 74 bps of easing by year end (50 bps cut in December).
NZDUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that NZDUSD broke above the key resistance zone around the 0.6217 level opening the door for a rally into the 0.6370 level. More buyers will likely start to pile in around these levels to position for the rally into new highs. The sellers, on the other hand, will want to see the price falling back below the 0.6217 level to position for a drop back into the 0.6050 zone.
NZDUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have a minor trendline defining the current bullish momentum. The buyers will likely keep on leaning on it with a defined risk below it to position for new highs, while the sellers will want to see the price breaking below the trendline and the 0.6217 level to start piling in for a drop into the 0.6050 level.
NZDUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the price fell below the trendline for a short time this morning but eventually erased all the losses. If the price breaks the recent high, we can expect the bullish momentum to increase, while a break below the trendline and the 0.6217 level should see the sellers taking control. The red lines define the average daily range for today.
Upcoming Catalysts
Tomorrow we get the latest US Jobless Claims figures, while on Friday, we conclude the week with the US PCE report.
