Basic overview
The US dollar continues to get support from good economic data as seen recently from the US PMIs last Friday and the US Consumer Confidence report this week. Although this data keeps interest rate expectations stable around two cuts by the end of the year, it should also support risk sentiment amid a recovery in growth. This could be a headwind for the dollar.
On the other hand, the New Zealand dollar was under pressure due to some US dollar strength this week. Price action seems to be influenced more by end-of-month, end-of-quarter, and end-of-year flows rather than something fundamental. We also saw a major USD/JPY breakout yesterday and flows there may have spilled over into other major pairs.
Technical Analysis of NZDUSD – Daily Time Frame
NZDUSD Daily
On the daily chart, we can see that the NZDUSD pair is bouncing at the major support level around 0.6082 level where we also have the 38.2% Fibonacci retracement level to meet. Yesterday the price broke below this level but eventually rose above it.
This is where buyers with a defined risk are likely to accumulate below the support level in order to prepare for a rise back to the 0.6217 resistance level. On the other hand, sellers will want to see the price fall again to gain more conviction and increase bearish bets to the 0.60 handle next.
NZDUSD Technical Analysis – 4-hour timeframe
NZDUSD 4 hours
On the 4-hour chart, we can see that the price action was mostly confined between the 0.6082 support and 0.6217 resistance levels. Buyers will want to see the price break through the downtrend line to gain more conviction and increase bullish bets to the 0.6217 resistance level next.
Sellers, on the other hand, are more likely to rely on a trend line with defined risks above it and put them in a position to break below support with a better risk to reward setup.
Technical analysis of NZDUSD – 1 hour time frame
NZDUSD 1 hour
On the 1-hour chart, we can see that we have a strong resistance area around the 0.6145 level where the price has been rejected several times. This is what buyers will eventually need to break to extend the rally towards the 0.6217 resistance level. The red lines mark the average daily range for the day.
Upcoming stimuli
Today we’ll get the latest US unemployment claims numbers, while we wrap up the week tomorrow with the US Personal Consumption Expenditures report.