USD

  • The Fed left interest rates unchanged as expected at the last meeting with a shift in the statement that indicated the end of the tightening cycle.
  • The latest US CPI slightly beat expectations but analysts expect the Core PCE to print at 0.2% M/M again following the CPI data.
  • The labour market continues to soften but remains resilient with US Jobless Claims beating expectations week after week.
  • The latest ISM Manufacturing PMI beat expectations, while the ISM Services PMI missed by a big margin.
  • The US Retail Sales beat expectations across the board.
  • The University of Michigan Consumer Sentiment report jumped to the highest levels since 2021.
  • The Fed members recently have been pushing back on the aggressive rate cuts expectations.
  • The market’s expectations for the first rate cut were pushed back to May following strong economic data.

NZD

  • The RBNZ kept its official cash rate unchanged at the last meeting stating that demand growth continues to ease and it’s expected to decline further with monetary conditions remaining restrictive.
  • The New Zealand inflation data printed in line with expectations supporting the RBNZ’s patient stance.
  • The latest labour market report showed a notable increase in the unemployment rate and a slowdown in wage growth which is something that will keep the RBNZ on the sidelines.
  • The Manufacturing PMI fell further into contraction with the Services PMI following suit.
  • The market expects the RBNZ to start cutting rates in Q2.

NZDUSD Technical Analysis – Daily Timeframe

NZDUSD Technical Analysis
NZDUSD Daily

On the daily chart, we can see that NZDUSD eventually fell all the way down to the key support zone around the 0.6050 level. This is where the buyers stepped in with a defined risk below the support to position for a rally back into the 0.64 resistance. The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets into the 0.59 handle. Alternatively, the sellers will have a better risk to reward setup at the downward trendline where they will also find the red 21 moving average for confluence.

NZDUSD Technical Analysis – 4 hour Timeframe

NZDUSD Technical Analysis
NZDUSD 4 hour

On the 4 hour chart, we can see that the sellers will have two different options where to short from:

  • The first is around the 0.6135 level where they have also the 38.2% Fibonacci retracement level for confluence.
  • The second is around the 0.62 handle where they will find the confluence of the previous swing low, the 61.8% Fibonacci retracement level, the trendline and the daily 21 moving average.

The buyers, on the other hand, will look to increase their bullish bets at every breakout with the 0.64 resistance as the ultimate target.

NZDUSD Technical Analysis – 1 hour Timeframe

NZDUSD Technical Analysis
NZDUSD 1 hour

On the 1 hour chart, we can see more closely the recent price action and we can also notice that the pair has been diverging with the MACD trading into the key support. This is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, the target for the pullback is right around the high of the consolidation at the 0.6135 level which is also where the sellers will have their first short opportunity.

Upcoming Events

Today the main event will be the US PMIs as the market will want to see how business activity has fared in January after some worrying data from regional surveys. Tomorrow, we have the Advance US Q4 GDP and the latest US Jobless Claims figures. Finally, on Friday we conclude the week with the US PCE report.