June 12, 2024 at 11:31AM
Fundamental
Overview
The USD has been stronger
since last Friday following the US NFP report where the data surprised with solid jobs
and wage growth. There were also negatives like the uptick in the unemployment
rate, but all in all, we can say that it was a good report.
The data triggered a
hawkish repricing in interest rates expectations with the market now expecting
once again just one cut by the end of the year. It’s not a big deal in the
bigger picture, but for now the sentiment is bullish for the greenback and we will
likely need a catalyst to change it again.
The NZD, on the other hand,
has been supported by the hawkish RBNZ decision where the central bank pushed
further out the timing for a rate cut and even added that they considered a
rate hike.
Moreover, the positive risk
sentiment has been a strong tailwind for the Kiwi as it’s generally good for
commodity currencies, so if it were to come back, we should see the NZD reach
new highs. All eyes today will be on the US CPI and FOMC decision as they can
turn the recent sentiment around or exacerbate it further.
NZDUSD
Technical Analysis – Daily Timeframe
On the daily chart, we can
see that NZDUSD sold off from the 0.6217 resistance
following the strong US NFP release before bouncing around the 0.61 handle. The
support around the 0.6082 level where we have also the 38.2% Fibonacci
retracement level for confluence
will be key as a break below it should open the door for a move into the 0.60
handle.
NZDUSD Technical
Analysis – 4 hour Timeframe
On the 4 hour chart, we can
see that the pair erased half of the losses from the NFP drop. There’s not much
to do here other than waiting for the data to come out. From a risk management
perspective, the buyers will have a better risk to reward setup around the
0.6082 support while the sellers will have it around the 0.6217 resistance.
NZDUSD Technical
Analysis – 1 hour Timeframe
On the 1 hour chart, we can
see that the price is trading inside a rising channel although it will be
easily broken today on the US CPI release. An upside breakout on in-line or
soft CPI should give the buyers more conviction for a rally into new highs.
Conversely, a breakout to
the downside on hot figures should give the sellers back control and increase
the chances of new lows. The red lines show the average
daily range for today but do note that the price can extend beyond them when
there are strong catalysts like today’s US CPI report.
Upcoming
Catalysts
Today we get the US CPI data and the FOMC rate decision. Tomorrow,
we have the US PPI and the latest US Jobless Claims figures. On Friday, we
conclude the week with the New Zealand Manufacturing PMI and the University of Michigan Consumer Sentiment survey.
This article was written by Giuseppe Dellamotta at www.forexlive.com.
