Fundamental Overview
The USD weakened across the board last week following another soft US CPI report and benign Jobless Claims figures. The market not only fully priced in a rate cut in September but also started to price in some chances of a back-to-back rate cut in November.
Overall, we had a goldilocks data release with an economy that is slowing but still growing. This should support the soft-landing narrative and be positive for the risk sentiment.
The NZD, on the other hand, keeps on being supported against the US Dollar mainly because of the risk-on sentiment as the US data continues to support at least two rate cuts from the Fed without sending recessionary signals.
On the monetary policy front, the RBNZ policy decision weighed on the Kiwi last week as the central bank changed slightly its language to a more dovish leaning which increased the odds of a rate cut at the next meeting as the market is now assigning a 53% probability for such a move.
NZDUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that NZDUSD couldn’t extend the gains following the bounce on the strong support zone around the 0.6050 level last week as the surprisingly dovish RBNZ decision weighed on the Kiwi. If the price falls back to the support zone, we can expect the buyers to step in again, while the sellers will want to see the price breaking lower to increase the bearish bets into new lows.
NZDUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have a range now between the 0.6150 resistance and the 0.6050 support. There’s not much to do here and the market participants will likely keep on “playing the range” until we get a breakout on either side.
NZDUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see the recent catalysts that eventually led to a rangebound price action. This week we don’t have much on the calendar but the New Zealand Q2 CPI report on Wednesday will be something to watch as a soft report might increase the odds of an August rate cut. The red lines define the average daily range for today.
Upcoming Catalysts
Today we have Fed Chair Powell speaking at the Economic Club of Washington, D.C. Tomorrow, we get the US Retail Sales report. On Wednesday, we have the New Zealand Q2 CPI and Fed’s Waller speaking. On Thursday, we conclude with the latest US Jobless Claims figures.
