NZDUSD Technical Analysis | Forexlive
On the daily chart below for NZDUSD, we can
see that since March, the market hasn’t moved much as the price action remained
rangebound with just one spike higher when the RBNZ surprised with a higher
than expected hike. There’s clearly uncertainty in this market with one side
betting on a recession or higher rates in favour of the USD and the other
betting on a soft landing in favour of the NZD.
The recent economic data though
hasn’t been good. In fact, last Friday the US
Retail Sales missed expectations across the board and sent the
USD higher as the recession vibes returned. Moreover, the move lower was given
an extra boost by the 1
year inflation expectations in the University of Michigan survey showing a big
jump to the upside.
On the 4 hour chart below, we can
see the big long range that began in March after the Silicon Valley Bank
collapsed and caused a little banking crisis. As a consequence, the market
priced in rate cuts by the end of the year and the US Dollar weakened. That was
the interest rates trade.
Now, the market may be switching
to the recession trade, which is when the USD appreciates as a safe haven.
There’s not much to do with this range other than buying at support and selling at resistance until the price breaks out
supported by a fundamental catalyst.
On the 1 hour chart below, we can
see that the miss in US Retail Sales caused a big selloff with the price
falling all the way back to the bottom of the range. The pullback afterwards
seems to have ended as the price broke below the short-term trendline and it’s now eyeing again the
bottom of the range.
The buyers should be waiting
there with a defined risk below the range targeting the top. The sellers, on
the other hand, will want to see the price breaking out to pile in and target
the low at 0.6084. The economic data to watch are the US Jobless
Claims tomorrow and US PMIs on Friday.