Fundamental Overview
Last Thursday, WSJ’s Timiraos published an article which seemed suggesting that a 50 bps cut was still being discussed. The market responded by raising 50 bps cut probabilities to around 40% from 13% before the news.
Nick Timiraos is considered a Fed “insider”, so the market is attentive to all of his pieces concerning potential Fed decisions. Since then, the 50 bps camp got more vocal and the probability for the Fed to cut by 50 bps at today’s meeting stands now around 61% with a total of 115 bps of easing by year-end.
This repricing weakened the US Dollar across the board as Treasury yields fell further. Once we are done with the Fed decision though, the focus will switch back to the economic data. In case we start to see better figures, the market might start to pare back the aggressive easing expected in 2025 supporting the greenback in the short-term.
For the RBNZ, the market sees a 77% probability of a 25 bps cut at the upcoming meeting and a total of 83 bps of easing by year-end.
NZDUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that NZDUSD is now back at the key 0.6217 resistance. This is where we can expect the sellers to step in with a defined risk above the level to position for a drop into the 0.6050 support zone. The buyers, on the other hand, will want to see the price breaking higher to position for a rally into the 0.6370 level.
NZDUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have an upward trendline defining the current bullish momentum. The buyers will likely keep on leaning on it to position for new highs, while the sellers will look for a break lower to increase the bearish bets into the 0.6050 support.
NZDUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more clearly the recent price action with the greenback feeling the pressure from the 50 bps cut expectations since last Thursday. The red lines define the average daily range for today.
Upcoming Catalysts
Today, we have the FOMC Rate Decision and tomorrow, we get the New Zealand Q2 GDP and the latest US Jobless Claims figures.
