Basic Overview
The US dollar has been broadly weaker since last Friday following the weak US non-farm payrolls report. The data showed further slowdown in the labor market with the unemployment rate rising and wage growth declining. Basically we have an economy that is slowing but still growing. We will see if the market can maintain positive sentiment in hopes of a soft landing or start worrying about a recession.
On the other hand, the New Zealand dollar gained last week against the US dollar on risk sentiment as US data continued to support at least two rate cuts by the Federal Reserve but did not send recession signals. Tomorrow, we have the Reserve Bank of New Zealand’s monetary policy decision where the central bank is expected to keep interest rates unchanged and maintain its hawkish stance.
NZDUSD Technical Analysis – Daily Time Frame
NZDUSD Daily Currency Pair
On the daily chart, we can see that the NZD/USD pair bounced off a strong support area around 0.6050 last week and extended its gains amid weak US data. Overall, we are still in a range and market participants continue to buy at support and sell at resistance. A breakout is likely to be needed to see a more sustainable trend.
NZDUSD Technical Analysis – 4-hour timeframe
NZDUSD 4 hours
On the 4-hour chart, we can see that the price rejected the resistance at 0.6150 and is now falling to the support level at 0.61. Here we can expect buyers to step in with a defined risk below the support level to position a suitable position for a break of the resistance with a better risk-reward setup. On the other hand, sellers will want to see the price drop to increase bearish bets towards the support level at 0.6050 after that.
NZDUSD Technical Analysis – 1-Hour Timeframe
NZDUSD 1 hour
On the 1-hour chart, we can see that we have a slight bearish trend line that defines the current bearish momentum. Sellers may continue to rely on it to continue pushing towards new lows, while buyers will want to see the price rise and clear the recent higher low at 0.6129 to regain some control and start targeting new highs. The red lines define the average daily range for today.
Upcoming incentives
Today, Fed Chairman Powell will testify before Congress and markets will be focused on any view or hint on monetary policy after the latest non-farm payrolls report. Tomorrow, we have the Reserve Bank of New Zealand’s monetary policy decision. Thursday will be the most important day of the week as we get the US CPI and US jobless claims numbers. Finally, on Friday, we close out the week with the US PPI and the University of Michigan Consumer Sentiment Survey.