Fundamental Overview

The USD has been generally weaker this week after the strength seen last week due to some risk off sentiment. In fact, it looks like it’s just sentiment that’s been driving the market recently as fundamentally the soft US inflation figures just consolidated the market’s expectation of two cuts for this year despite a bit more hawkish than expected FOMC decision.

The NZD, on the other hand, got pressured mainly because of the risk-off sentiment and the US Dollar strength. The mood in the market has been gradually improving this week and we saw the Kiwi gaining ground as a consequence.

We also had some good news for New Zealand today as the Q1 GDP showed positive growth and took the economy out of the technical recession. GDP is generally not a strong market moving catalyst because it’s old news but nonetheless that confirms a pickup in growth in the first part of the year.

NZDUSD Technical Analysis – Daily Timeframe

NZDUSD Technical Analysis

On the daily chart, we can see that NZDUSD bounced near the key support around the 0.6082 level where we have also the 38.2% Fibonacci retracement level for confluence.

The buyers stepped in around the bottom of the range and they are now targeting a rally back into the 0.6217 resistance. That’s where we can expect the sellers piling in again with a defined risk above the resistance to position for a drop back into the bottom of the range.

NZDUSD Technical Analysis – 4 hour Timeframe

NZDUSD Technical Analysis
NZDUSD 4 hour

On the 4 hour chart, we can see that the price action has been mostly rangebound between the 0.6082 support and the 0.6217 resistance. These will be the key levels that the market will need to break to start a more sustained trend. For now, we could keep bouncing around as the market awaits new catalysts.

NZDUSD Technical Analysis – 1 hour Timeframe

NZDUSD Technical Analysis
NZDUSD 1 hour

On the 1 hour chart, we can see that we have a strong resistance zone around the 0.6145 level where the price got rejected from several times in the past days.

The buyers will want to see the price breaking higher to gain more conviction and increase the bullish bets into the 0.6217 level. The sellers, on the other hand, will likely keep on leaning on that resistance to position for a drop back into the 0.6082 support. The red lines define the average daily range for today.

Upcoming Catalysts

Today we have the US Housing Starts, Building Permits and the US Jobless Claims figures. Tomorrow, we conclude the week with the US PMIs.