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 Technical Analysis

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 Technical Analysis
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 Technical Analysis
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.