NZDUSD Technical Analysis | Forexlive

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 recent US CPI missed
  expectations across the board bringing the expectations for rate cuts
  forward.
• The labour market is
  starting to show weakness as Continuing Claims are now
  rising at a fast pace and the recent NFP report
  missed across the board. Last week though, the US Jobless Claims beat
  forecasts by a big margin, although volatility in the data is normal.
• The latest US PMIs came
  basically in line with expectations with a miss in the Manufacturing index and
  a beat in the Services measure.
• The recent Fedspeak has been leaning on
  the hawkish side, but the recent data suggest that the Fed is likely done for
  the cycle.
• The market doesn’t
  expect the Fed to hike anymore.

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 recent 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 doesn’t expect the RBNZ
  to hike anymore.

NZDUSD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that NZDUSD reached
the key resistance zone
around the 0.61 handle where we can also find the 50% Fibonacci retracement level
for confluence. This is
where we can expect the sellers to step in with a defined risk above the
resistance to position for a drop back into the lows. The buyers, on the other
hand, will want to see the price breaking decisively higher to continue
targeting new highs.

NZDUSD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that the price has
been diverging with the
MACD for
quite some time right into the key resistance zone. This is generally a sign of
weakening momentum often followed by pullbacks or reversals. In this case, it
might be another confirmation for the sellers that we might see at least a
deeper pullback, which is supported further by the rising wedge
formation. The first target for the sellers should be the base of the wedge
around the 0.5950 level with a further break likely leading to a drop into the
0.5860 level.

NZDUSD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see more
closely the price action around the resistance zone and the rising wedge
pattern. The buyers should lean on the bottom trendline to
position for a rally into new highs. The sellers, on the other hand, will want
to see the price breaking lower to increase the bearish bets into the 0.5950
level.

Upcoming Events

Today, we will get the latest US Consumer Confidence
report and it will be interesting to see how the US consumers see the labour
market. Tomorrow, we have the RBNZ rate decision where the central bank is
expected to keep rates unchanged. On Thursday, we will see the US PCE and US
Jobless Claims data with the market likely focusing more on the latter given
that we already saw the latest inflation data with the US CPI report just two
weeks ago. Finally, on Friday, we conclude the week with the US ISM
Manufacturing PMI which missed expectations by a big margin the last time.