Fundamental
Overview
The USD remains weak across
the board as market participants now await the key US data releases with the
government shutdown expected to end this week.
The initial weakness didn’t
hold though as the US dollar eventually regained some ground. It seems like the
market is now just waiting for the government data to confirm the weakness and
the December cut. In fact, the market pricing is still standing around 64%
probability for a December cut.
On the NZD side, the RBNZ cut
by 50 bps at the last meeting bringing the OCR to 2.5%, which is the lower
bound of their estimated neutral range (2.5%-3.5%). They kept an easing bias
though as they are trying to “feel their way” as RBNZ’s Conway recently said. The
market is still pricing a 91% probability of a 25 bps cut at the upcoming
meeting given lack of improvements in the economic data.
NZDUSD
Technical Analysis – Daily Timeframe
On the daily chart, we can
see that the NZDUSD continues to consolidate around the recent lows. We have a
major downward trendline 0.5700 handle. If we get a pullback into it, we can
expect the sellers to lean on the trendline with a defined risk above it to
position for a drop into new lows. The buyers, on the other hand, will want to
see the price breaking higher to increase the bullish bets into the 0.5850
resistance next.
NZDUSD Technical
Analysis – 4 hour Timeframe
On the 4 hour chart, we can
see that we have a key swing high around the 0.5670 level where we got the
first rejection. That’s where we can expect the sellers to step in with a
defined risk above the swing level to position for a drop into new lows, while
the buyers will look for a break higher to increase the bullish bets into the
major trendline.
NZDUSD Technical
Analysis – 1 hour Timeframe
On the 1 hour chart, we can
see that we have a minor upward trendline defining the bullish momentum. We can
expect the buyers to lean on the trendline to keep pushing into new highs,
while the sellers will look for a break lower to increase the bearish bets into
new lows
