The Fed
is waiting for the totality of the data to be released before deciding what to
do at their September meeting. As of now, the data supports the soft-landing
narrative as the disinflation in the core measures
continues but the strength in the labour market and consumer spending might
keep inflation higher for longer. This is something that might translate into
more rate hikes or a “higher for longer-er” stance. Recently the long-term
Treasury yields have been rising non-stop and this has benefited the US Dollar
but the reason for such a rally is still unclear.
The RBNZ, on the other hand, kept its official cash
rate unchanged while stating that it will remain at the restrictive level for
the foreseeable future to ensure that inflation comes down back to target. The
recent New Zealand inflation and employment data surprised to the upside but
the PMIs are in contraction with the Services PMI this week plunging into
contraction. The wage growth has also missed expectations and it’s something
that the central banks are watching closely for second round effects.
NZDUSD Technical Analysis –
Daily Timeframe
NZDUSD Daily
On the daily chart, we can see that NZDUSD just
keeps on falling with very shallow pullbacks. The breakout of the 0.5987 low
has also opened the door for a fall into the 2022 low at 0.5514. The pair
remains in a “sell on rallies” mode as the trend is clearly bearish with the
price printing lower lows and lower highs and the moving averages crossed
to the downside.
NZDUSD Technical Analysis –
4 hour Timeframe
NZDUSD 4 hour
On the 4 hour chart, we can see that we’ve been diverging with the
MACD for a
while which is a sign of weakening momentum often followed by pullbacks or
reversals. In this case, if we get a pullback, there will be a strong resistance at the
previous support turned resistance where we
can also find the trendline and
38.2% Fibonacci retracement level.
This is where the sellers are likely to pile in with a defined risk above the
trendline and target the 0.5514 low.
NZDUSD Technical Analysis –
1 hour Timeframe
NZDUSD 1 hour
On the 1 hour chart, we can see that we
have a divergence even on this shorter timeframe as the pair becomes more and
more oversold. The resistance is highlighted by the blue zone and the buyers
will need to break above it and extend the rally past the trendline to have
more conviction for a return towards the highs.