FUNDAMENTAL OVERVIEW
USD:
Last week, we got a hot US NFP report and slightly soft US CPI data. The market firmed up rate cut bets with 62 bps of easing seen by year-end. Overall, the data doesn’t really point in that direction, but we will need to see more of it to confirm or deny the market pricing.
Given the negligible changes to the big picture after all the data, the US dollar remained mostly rangebound with mixed performance against the major currencies. The future outlook will still be guided by the evolution of the data.
This week, all the important stuff will be released on Friday as we get the US Flash PMIs and the Q4 GDP. We might also get the US Supreme Court decision on Trump's tariffs.
NZD:
On the NZD side, the RBNZ is widely expected to keep the OCR unchanged at 2.25% on Wednesday. At the last meeting, the central bank’s projections implied a pause through 2026. The market disagrees as it sees 37 bps of tightening by year-end. The data has been coming in better and better, suggesting that the New Zealand economy turned a corner. Governor Breman’s recent comments were neutral as she emphasised patience and full optionality. The currency rallied so much mainly because of the US dollar weakness and the tight correlation with the Australian dollar.
NZDUSD TECHNICAL ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can see that the NZDUSD has been consolidating near the highs after the strong rally at the end of January. There’s not much we can glean from this timeframe, so we need to zoom in to see some more details.
NZDUSD TECHNICAL ANALYSIS – 4 HOUR TIMEFRAME
On the 4 hour chart, we can see that we have a key swing point around the 0.5995 level defining the bullish momentum on this timeframe. From a risk management perspective, the buyers will have a better risk to reward setup around the 0.5995 level to position for a rally into new cycle highs. The sellers, on the other hand, will look for a break lower to pile in for a drop into the 0.5928 level next.
NZDUSD TECHNICAL ANALYSIS – 1 HOUR TIMEFRAME
On the 1 hour chart, we can see that we have a minor upward trendline defining the current consolidation. The buyers will likely continue to lean on the trendline with a defined risk below it to keep pushing into new highs, while the sellers will look for a break lower to target the 0.5995 level. The red lines define the average daily range for today.
UPCOMING CATALYSTS
On Wednesday we have the RBNZ policy decision and the FOMC meeting minutes. On Thursday, we get the latest US Jobless Claims figures. On Friday, we conclude the week with the US Q4 GDP, the US PCE price index for December, the US Flash PMIs and a potential US Supreme Court decision on Trump’s tariffs.
