Fundamental
Overview
The USD weakened across the
board since last Friday following the soft US NFP report. The data showed some more labour
market cooling with an increase in the unemployment rate and a decrease in wage
growth. We basically have an economy that is slowing but still growing. We will
see if the market will be able to keep the positive sentiment on soft landing
hopes or start to worry about a recession.
The NZD, on the other hand,
gained last week against the US Dollar mainly because of the risk-on sentiment
as the US data continued to support at least two rate cuts from the Fed but
didn’t send recessionary signals. Tomorrow, we have the RBNZ policy decision
where the central bank is expected to keep interest rates unchanged and maintain
the hawkish stance.
NZDUSD
Technical Analysis – Daily Timeframe
NZDUSD Daily
On the daily chart, we can
see that NZDUSD bounced from a strong support zone around the 0.6050 level last week and
extended the gains amid soft US data. Overall, we are still in a range and the
market participants keep on buying at support and selling at resistance. We
will likely need a breakout to see a more sustained trend.
NZDUSD Technical
Analysis – 4 hour Timeframe
NZDUSD 4 hour
On the 4 hour chart, we can
see that the price rejected the resistance at 0.6150 and it’s now falling to
the support around the 0.61 handle. That’s where we can expect the buyers to
step in with a defined risk below the support to position for a break above the
resistance 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
0.6050 support next.
NZDUSD Technical
Analysis – 1 hour Timeframe
NZDUSD 1 hour
On the 1 hour chart, we can
see that we have a minor downward trendline
defining the current bearish momentum. The sellers might continue to lean on it
to keep pushing into new lows, while the buyers will want to see the price
breaking higher and above the most recent lower high at 0.6129 to regain some
control and start targeting new highs. The red lines define the average daily range for today.
Upcoming
Catalysts
Today we have Fed Chair Powell testifying to Congress and the markets will be
focused on any view or hint about monetary policy after the recent NFP report. Tomorrow,
we have the RBNZ policy decision. Thursday will be the most important day of
the week as we get the US CPI and the US Jobless Claims figures. Finally, on
Friday, we conclude the week with the US PPI and the University of Michigan
Consumer Sentiment survey.
