Fundamental
Overview
The USD continues to remain
under pressure amid positive risk sentiment and the imminent rate cuts from the
Fed which should help global growth. These are generally bearish drivers for
the greenback.
In fact, the recent strong
appreciation of the NZD has been mostly driven by the US Dollar side of the
equation. After the recent more dovish than expected RBNZ decision, the market is pricing a 95% probability of a rate cut in October and then at least another 25 bps cut before year-end.
The focus now will be on
tomorrow’s Flash US PMIs and then Fed Chair Powell speech at the Jackson Hole
Symposium on Friday.
NZDUSD
Technical Analysis – Daily Timeframe
NZDUSD Daily
On the daily chart, we can
see that NZDUSD broke above the key resistance zone around the 0.6050 for good
this time and extended the gains into the 0.6150 level. This is where we can
expect the sellers to step in with a defined risk above the level to position
for a drop back into the 0.6050 support. The buyers, on the other hand, will
want to see the price breaking higher to increase the bullish bets into the 0.6217
resistance.
NZDUSD Technical
Analysis – 4 hour Timeframe
NZDUSD 4 hour
On the 4 hour chart, we can
see that we have a very strong support zone around the 0.6050 level where we
can find the confluence
of the trendline
and the 61.8% Fibonacci
retracement level. If the price were to get there, we can expect the buyers
to step in with a defined risk below the support to position for a rally into
new highs with a better risk to reward setup. The sellers, on the other hand,
will want to see the price breaking lower to increase the bearish bets into new
lows.
NZDUSD Technical Analysis – 1 hour Timeframe
NZDUSD 1 hour
On the 1 hour chart, we can
see that we broke below a minor upward trendline today which was defining the
bullish momentum since the 0.60 handle. This could be a signal of waning momentum,
so the buyers will likely wait for a bigger pullback or a catalyst before resuming
the uptrend. The red lines define the average daily range for today.
Upcoming
Catalysts
Tomorrow we get the US Jobless Claims and US PMIs. On Friday we conclude the
week with Fed Chair Powell speaking at the Jackson Hole Symposium.