January 21, 2025 at 11:08AM
Fundamental
Overview
The USD has been marginally
weaker recently due to lower than expected US inflation figures last week that
sent Treasury yields lower and made the market to price in higher chances of a
second rate cut by the end of the year.
Yesterday, the greenback
weakened across the board following a WSJ report saying that Trump would lay out the
trade vision but won’t impose tariffs yet. Tonight though, he spoke to the
media and said that he intends to impose 25% tariffs on Canada and Mexico next week.
Following the news, the US Dollar erased almost all the losses from the prior
day.
On the NZD side, as a
reminder, the RBNZ cut interest rates by 50 bps as expected at
the last meeting. The market is pricing a 52% chance of a 50 bps cut in
February and a total of 105 bps of easing by year end.
Today we get the New
Zealand Q4 CPI report which is going to influence the interest rate
expectations for the RBNZ.
NZDUSD
Technical Analysis – Daily Timeframe
On the daily chart, we can
see that NZDUSD spiked into the trendline yesterday but got rejected as
the sellers stepped in with a defined risk above the trendline to position for
a drop into the 2020 lows around the 0.55 handle. The buyers will need the
price to break above the trendline to regain control and start targeting new
highs.
NZDUSD Technical
Analysis – 4 hour Timeframe
On the 4 hour chart, we can
see that the pair failed to break above the key resistance zone around the 0.5680 level.
Again, the buyers will need to break above that resistance to open the door for
new highs, while the sellers will continue to defend the level and position for
new lows.
NZDUSD Technical
Analysis – 1 hour Timeframe
On the 1 hour chart, we can
see that the price broke below the upward minor trendline that was defining the bullish momentum on this
timeframe. The buyers will likely step in around the 0.5620 support to position
for the break above the resistance. The sellers, on the other hand, will look
for a break lower to increase the bearish bets into new lows. The red lines
define the average daily range for today.
Upcoming
Catalysts
Today we have the New Zealand Q4 CPI
report. On Thursday, we get the latest US Jobless Claims figures, while on
Friday we conclude the week with the Flash US PMIs.
This article was written by Giuseppe Dellamotta at www.forexlive.com.
