The strong USD weakness seen after the miss in the US CPI report was completely erased as the US data kept on printing on the hot side with the US Retail Sales Control Group beating expectations by a big margin and the US Initial Claims returning to record low levels. Yesterday, the US PMIs painted a mixed picture with the Services PMI missing expectations, although remaining in expansion, and the Manufacturing PMI jumping from 46.2 to 49.0, almost rising back into expansion.
The RBNZ, on the other hand, kept its official cash rate unchanged while stating that it will remain at the restrictive level for the foreseeable future to ensure that inflation comes down back to target. The recent New Zealand inflation data though surprised to the upside which might put some pressure on the central bank at the next rate decision.
NZDUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that the NZDUSD sold off pretty heavily from the key 0.6389 resistance for an entire week erasing all the gains made after the miss in the US CPI report. We have finally seen a bounce yesterday, but the bias remains bearish at the moment.
NZDUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price broke below the strong support zone at 0.6220 and it’s now coming back to retest the level. We have some good confluence here with the downward trendline, the 38.2% Fibonacci retracement level and the red 21 moving average adding strength to the resistance. This is where the sellers should pile in with a defined risk above the resistance and target the 0.6050 swing low level. The buyers, on the other hand, will need the price to break above the resistance with conviction to jump onboard and target the 0.6389 level.
NZDUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more closely the resistance zone with the price already reacting to the level. More conservative sellers may want to wait for the price to break below the upward counter-trendline to pile in and target the 0.6050 level. The buyers, on the other hand, will have a stronger confirmation for the resumption in the uptrend if the price rallies past the 61.8% Fibonacci retracement level and the last swing high at 0.6239.
Upcoming Events
Today the only notable event will be the US Consumer Confidence report where the market will want to see if the last month incredibly strong report was just a blip. Tomorrow, the Fed is expected to hike by 25 bps and the market will be focused on any hint of a pause or further rate hikes. On Thursday, it will be the time for another US Jobless Claims report while on Friday we conclude the week with the US PCE and ECI reports.