USD
- 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 CPI yesterday came in line with expectations with the disinflationary progress continuing steady.
- The labour market has been showing signs of weakening lately but last week we got some strong releases with the US Jobless Claims and the NFP coming in strongly.
- The latest ISM Manufacturing PMI missed expectations falling further into contraction, while the ISM Services PMI beat forecasts holding on in expansion.
- The University of Michigan Consumer Sentiment survey came in much better than expected with inflation expectations tumbling.
- The hawkish Fed members recently shifted their stance to a more neutral position.
- The market expects the Fed to start cutting rates in Q2 2024.
NZD
- 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 expects the RBNZ to start cutting rates in Q3 2024.
NZDUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that NZDUSD is now at a key support zone around the 0.61 handle where we can find the confluence with the 38.2% Fibonacci retracement level and the red 21 moving average. This is where we can expect the buyers to step in with a defined risk below the support to position for a rally into the next resistance around the 0.64 handle. The sellers, on the other hand, will want to see the price breaking lower to invalidate the bullish setup and position for a drop into the 0.5850 level.
NZDUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price has been diverging with the MACD since the last US CPI report in November. This is generally a sign of weakening momentum often followed by pullbacks or reversals. The price has now pulled back into the key support and that’s where we should see more buyers piling in. If the price breaks below the support though, the reversal would be confirmed and there will be high chances of seeing a selloff all the way down to the 0.5850 level. We can also notice that the price is trading inside a falling channel, so a break above it should confirm a bullish flag and lead to much higher prices.
NZDUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more closely the price action inside the channel with the price approaching the lower bound of the channel. The buyers should start to pile in around these levels and increase the bullish bets if the price breaks above the downward counter-trendline as it would give a confirmation of a pickup in the bullish momentum. The sellers, on the other hand, have 3 options:
- Wait for the price to break below the key support.
- Lean on the counter-trendline to position for a break below the support.
- Lean on the upper bound of the channel.
Upcoming Events
Today, we have the US PPI data followed by the FOMC rate decision where the Fed is expected to keep interest rates unchanged. Tomorrow, we will see the latest US Retail Sales and Jobless Claims figures, while on Friday we conclude the week with the US PMIs.
