NZDUSD Technical Analysis | Forexlive

USD

• The Fed left interest rates unchanged as
  expected with a shift in the statement that indicated the end of the tightening
  cycle.
• The Summary of Economic Projections showed a
  downward revision to Growth and Core PCE in 2024 while the Unemployment Rate
  was left unchanged. Moreover, the Dot Plot was revised to show three rate cuts
  in 2024 compared to just two in the last projection.
• Fed Chair Powell didn’t
  push back against the strong dovish pricing and even said that they are focused
  on not making the mistake of holding rates high for too long, which implies a
  rate cut coming soon.
• The US CPI last
  week came in line with expectations with the disinflationary progress
  continuing steady. This was also confirmed by the US PPI the
  day after where the data missed estimates.
• The labour market has been showing signs of
  weakening lately but we got some strong releases recently with the US Jobless Claims and the NFP coming
  in strongly.
• The US Retail Sales last
  week beat expectations across the board as consumer spending continues to hold.
• The latest ISM Manufacturing
  PMI
  missed expectations falling further into contraction, while the ISM Services PMI beat
  forecasts holding on in expansion.
• The market expects the Fed to start cutting rates
  in Q1 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 will
  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 surged
to new highs following the surprisingly dovish FOMC decision and it’s now
testing a key trendline. This is
where we can expect the sellers to step in with a defined risk above the
trendline to position for a pullback into the upward trendline and eyeing a
break lower. The buyers, on the other hand, will want to lean on the upward
trendline where they will find the 21 moving average for confluence.

NZDUSD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that in case of a
pullback the buyers will also find the 50% Fibonacci retracement level
around the trendline for further confluence. From a risk management
perspective, the buyers will have a much better risk to reward setup around the
upward trendline to target the 0.64 handle. The sellers, on the other hand,
will want to see the price breaking below the trendline to invalidate the bullish
setup and increase the bearish bets into the 0.6050 support.

NZDUSD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that the
pair is diverging with
the MACD right
at the key trendline. This is generally a sign of weakening momentum often
followed by pullbacks or reversals. Some aggressive buyers might want to lean
on the minor upward trendline to position for a breakout to the upside and
target the 0.64 handle. The sellers, on the other hand, will want to see the
price breaking below the trendline to confirm the reversal and target the 50%
Fibonacci retracement level.

Upcoming Events

This week is a bit empty on the data front as we head
into the Christmas holidays. Today, we have the US Consumer Confidence report. Tomorrow,
we get the latest US Jobless Claims data, while on Friday we conclude the week
with the US PCE report.