Fundamental Overview
The USD yesterday weakened across the board following soft US Jobless Claims and ISM Services PMI reports. Overall, the data didn’t change much in terms of interest rates expectations, but it reinforced the view that the Fed is going to deliver at least two rate cuts by the end of the year.
The NZD, on the other hand, has been under pressure mainly due to the US Dollar strength last week which has been influenced more by quarter-end flows rather than something fundamental. This week, the US Dollar is back on the defensive as the market continues to trade the soft-landing narrative.
NZDUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that NZDUSD probed below the key support around the 0.6082 level last week but eventually failed to sustain the breakout. The buyers seem now back in control and the first target should be 0.6217 resistance.
The sellers, on the other hand, will want to see the price breaking lower again to gain more conviction and 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 yesterday broke above the downward trendline which was defining the bearish momentum. The buyers increased the bullish bets as they gained a bit more conviction to position for a rally back into the 0.6217 resistance.
NZDUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have a good support zone around the 0.61 handle where we can find the confluence of the 50% Fibonacci retracement level and the upward minor trendline. If we do get a pullback from the current levels, we can expect the buyers to step in around the support to position for a rally into the resistance with a better risk to reward setup.
The sellers, on the other hand, will want to see the price breaking below the trendline and the 0.6080 zone to regain control and increase the bearish bets into the 0.60 handle next. The red lines define the average daily range for today.
Upcoming Catalysts
Tomorrow we conclude the week with the US NFP report where the data is expected to show 180K jobs added in June and the Unemployment Rate to remain unchanged at 4.0%.
