Fundamental
Overview
The USD got a boost
yesterday following an ugly US
ISM Manufacturing PMI as the markets went into risk-off. Overall, we had goldilocks data releases
until now with an economy that’s been slowing but still growing. So, one bad
report might not be a gamechanger, but the markets are increasingly sensitive
to bad news in this part of the cycle.
On the monetary policy
front, we had the FOMC rate decision on Wednesday and as expected it was
a dovish one. Fed Chair Powell hinted to a September rate cut and didn’t even
close the door for “several” rate cuts before the end of the year. The market
has now fully priced in three rate cuts by the end of the year and continues to
raise the chances of a 50 bps cut in September.
The NZD, on the other hand,
has been on a steady fall as we got the unwinding of the Yen carry trades and general
risk-off sentiment. On the monetary policy front, the last RBNZ policy decision weighed on the Kiwi as the central
bank changed slightly its language to a more dovish leaning which increased the
rate cuts expectations.
NZDUSD
Technical Analysis – Daily Timeframe
On the daily chart, we can
see that NZDUSD bounced around the April’s lows at 0.5850 and extended the
gains into the 0.5980 level before pulling back on weak US data and general
risk-off moves.
From a risk management
perspective, the sellers will have a much better risk to reward setup around
the 0.6050 resistance
zone where we can also find the confluence
of the trendline
and the 61.8% Fibonacci
retracement level. The buyers, on the other hand, will want to see the
price breaking above that strong resistance to increase the bullish bets into
the 0.6217 level next.
NZDUSD Technical
Analysis – 4 hour Timeframe
On the 4 hour chart, we can
see that we have a minor trendline defining the recent bullish momentum. The
buyers will likely keep on leaning on it to position for the continuation of
the rally into the 0.6050 resistance zone. The sellers, on the other hand, will
want to see the price breaking lower to position for a drop back into the
0.5850 lows.
NZDUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can
see that we have also the 50% Fibonacci retracement level adding confluence to
the trendline. This 0.5930 support zone will be key in the short-term as a strong
bounce will likely lead to a rally into the major resistance, while a break
lower should take the pair back to the 0.5850 lows. The red lines define the average daily range for today.
Upcoming
Catalysts
Today we conclude the week with the US NFP report where the consensus expects
175K jobs added in July and the Unemployment Rate to remain unchanged at 4.1%.
This article was written by Giuseppe Dellamotta at www.forexlive.com.
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