- The Fed left interest rates unchanged as expected with basically no change to the statement.
- Fed Chair Powell stressed once again that they are proceeding carefully as the full effects of policy tightening have yet to be felt.
- The recent US Core PCE came in line with expectations.
- The labour market is starting to show some weakness as Continuing Claims are now rising at a fast pace and the NFP data last Friday missed across the board.
- The US Consumer Confidence fell for the third consecutive month although the data beat expectations.
- The US ISM Manufacturing PMI last week missed expectations by a big margin, followed later on Friday with a disappointing ISM Services PMI, although the index remained in expansion.
- The market doesn’t expect the Fed to hike anymore.
- The RBNZ kept its official cash rate unchanged while stating that demand growth continues to ease and it’s expected to decline further with monetary conditions remaining restrictive.
- The New Zealand recent inflation data missed expectations supporting the RBNZ’s stance.
- The latest labour market report showed a notable increase in the unemployment rate and a slowdown in wage growth which is something that is likely to keep the RBNZ on the sidelines.
- The Manufacturing PMI continues to slide further into contraction, but the Services PMI jumped back into expansion.
- The market doesn’t expect the RBNZ to hike anymore.
NZDUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that the NZDUSD pair surged into the key resistance levels following the miss in the NFP data last Friday. The sellers stepped in around the 0.60 handle and the price sold off paring back all the Friday gains. The failed break above the trendline left behind a fakeout, which is generally a reversal pattern.
NZDUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have a good support zone around the 0.5915 level where there’s also the 38.2% Fibonacci retracement level for confluence. This is where the buyers are likely to step in with a defined risk below the level to position for another rally into the highs and target a breakout. The sellers, on the other hand, will want to see the price breaking lower to target the support around the 0.5860 level.
NZDUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that if the price breaks below the 0.5915 support, the buyers will have another opportunity to position for a rally with an even better risk to reward setup around the 0.5860 support where there’s also the 61.8% Fibonacci retracement level for confluence. The sellers, again, will increase the bearish bets in case the price breaks below the 0.5860 support and target a new low.
This week is pretty empty on the data front with just the US Jobless Claims on Thursday and the University of Michigan Consumer Sentiment on Friday. The market is likely to focus on the US Jobless Claims on Thursday given the recent weakness in the labour market data.