- The Fed left interest rates unchanged as expected at the last meeting 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 US Core PCE last week came in line with forecasts with the disinflationary progress continuing steady.
- The labour market continues to show weakness as Continuing Claims are now rising at a fast pace with the last NFP report missing across the board and yesterday’s Job Openings falling much more than expected.
- The ISM Manufacturing PMI last week missed expectations falling further into contraction, while the ISM Services PMI yesterday beat forecasts holding on in expansion.
- The hawkish Fed members recently shifted their stance to a more neutral position.
- The market expects the Fed to start cutting rates as soon as Q1 2024.
- The RBNZ kept its official cash rate unchanged at the last meeting while stating that demand growth continues to ease and it’s expected to decline further with monetary conditions remaining restrictive.
- The New Zealand 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 fell further into contraction followed by the Services PMI which fell back into contraction.
- The market doesn’t expect the RBNZ to hike anymore.
NZDUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that NZDUSD broke decisively through the key resistance zone around the 0.6070 level and extended the rally into the 0.62 handle. From a risk to reward perspective, the buyers should wait for a pullback into the resistance now turned support where we can find the confluence with the 38.2% Fibonacci retracement level and the red 21 moving average. The target for the buyers should be the next resistance around the 0.64 handle.
NZDUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price has been diverging with the MACD for quite some time. This is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, it might be another confirmation for the buyers to wait for a pullback into the 0.6070 support zone. The sellers, on the other hand, will want to see the price falling back below the support zone to confirm a reversal and position for a drop into the 0.59 handle.
NZDUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more closely the current price action with no clear level in sight where to lean on to. This is where some patience is needed to let the market come into the defined setup instead of chasing the price and risk some unnecessary losses due to FOMO.
Today we have another US labour market report with the release of the US ADP data. Tomorrow, it will be the time for the US Jobless Claims figures, while on Friday we conclude the week with the NFP report.