Fundamental Overview
The USD last week lost ground across the board following the soft US CPI report as the market priced back in two rate cuts by the end of the year. The moves were reversed soon after though as we got a bit more hawkish than expected FOMC decision where the dot plot showed that the Fed expected just one cut for this year despite the soft US CPI report.
Fed Chair Powell backpedalled on the projections nonetheless making them a bit less worrying as the central bank remains very data dependent. The rally in the US Dollar eventually picked up steam as the risk sentiment turned more cautious.
The NZD, on the other hand, got pressured mainly because of the risk-off sentiment and the US Dollar strength. Moreover, today the Services PMI came in very weak which weighed on the Kiwi in the Asian session.
NZDUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that NZDUSD spiked into the key 0.6217 resistance following the soft US CPI report and then sold off following the more hawkish than expected FOMC decision. We have a strong support around the 0.6082 level where we have also the 38.2% Fibonacci retracement level for confluence.
This is where 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 the 0.60 handle next.
NZDUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price action has been mostly rangebound between the 0.6082 support and the 0.6217 resistance. These will be the key levels that the market will likely need to break to start a more sustained trend. For now, will could keep bouncing around as the market awaits new catalysts.
NZDUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that from a risk management perspective, the sellers have a good resistance zone around the 0.6142 level where they will also find the confluence of the trendline and the 38.2% Fibonacci retracement level.
The buyers, on the other hand, will want to see the price breaking higher to gain some conviction and start targeting the break above the 0.6217 resistance. The red lines define the average daily range for today.
Upcoming Catalysts
Tomorrow we have the US Retail Sales and US Industrial Production. On Thursday, we get the New Zealand GDP and later in the day the US Housing Starts, Building Permits and the US Jobless Claims figures. On Friday, we conclude the week with the US PMIs.