Fundamental Overview
The USD has been generally under pressure since last week’s favorable US CPI report, as hawkish expectations eased and the market shifted its focus from inflation to growth. This triggered positive risk sentiment, which was generally negative for the greenback, and which benefited other major currencies.
The NZD, on the other hand, benefited today from a hawkish move by the RBNZ, in which the central bank further pushed back the timetable for a rate cut and even added that it was considering a rate hike. The currency is expected to remain supported amid positive risk sentiment and a hawkish RBNZ for the time being.
NZDUSD Technical Analysis – Daily Timeline
NZDUSD Daily
On the daily chart, we can see that NZDUSD recently broke above the trendline following the US CPI report and consolidated around the highs. This opened the door for a rally towards the 0.6217 swing level and should give more conviction to buyers, especially after the RBNZ’s hawkish move.
NZDUSD Technical Analysis – 4 Hour Timeframe
NZDUSD 4 hours
On the 4-hour chart we can see that from a risk management perspective, buyers will have good risk to reward a setup around the uptrend line where they will also find the 50 Fibonacci retracement level % for confluence. Sellers, on the other hand, will want to see the price drop to invalidate the bullish setup and position for a decline into the 0.60 handle.
NZDUSD Technical Analysis – 1 Hour Timeframe
NZDUSD 1 hour
On the hourly chart, we can see that we are stuck in a range between the support of 0.6095 and the resistance of 0.6140. Another breakout higher should see buyers rally more aggressively to extend the rally to the 0.6217 level, although we are unlikely to see this today as we have the upper limit of the average daily range right at the resistance level.
FOMC minutes or US PMIs could boost the dollar in the near term and provide a buying opportunity on the dips as long as there are no worrying inflationary comments in the PMIs.
Upcoming catalysts
Today we have the FOMC minutes at the end of the day, although the market is unlikely to move. Tomorrow we have New Zealand’s first quarter retail sales, US PMIs and the latest US jobless claims figures.
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