Basic Overview
Last Thursday, The Wall Street Journal’s Timiraos published an article that seemed to suggest that a 50 basis point cut was still under discussion. The market responded by raising the odds of a 50 basis point cut to about 40% from 13% before the news.
Nick Timiraos is considered a Fed insider, so the market is paying attention to everything he writes about potential Fed decisions. Since then, the 50bps cut camp has become more vocal, and the odds of a 50bps Fed cut at today’s meeting are now around 61% for a total of 115bps of easing by year-end.
This new pricing has led to a broad weakening of the US dollar as US Treasury yields have fallen further. But once the Fed decision is finalized, the focus will return to economic data. If we start seeing better numbers, the market could start to taper off the aggressive monetary easing expected in 2025 to support the US dollar in the near term.
For the Reserve Bank of New Zealand, the market sees a 77% chance of a 25bp cut at the next meeting and a total of 83bp of easing by the end of the year.
NZDUSD Technical Analysis – Daily Time Frame
NZDUSD Daily Currency Pair
On the daily chart, we can see that the NZD/USD pair has now returned to the key resistance level of 0.6217. Here we can expect sellers to step in with a defined risk above this level to prepare themselves for a drop to the support area of 0.6050. On the other hand, buyers will want to see the price rise higher to prepare themselves for a rise to the 0.6370 level.
NZDUSD Technical Analysis – 4-hour timeframe
NZDUSD 4 hours
On the 4-hour chart, we can see that we have a rising trend line that defines the current bullish momentum. Buyers are likely to continue relying on it to set new highs, while sellers will look for a break below to increase bearish bets towards the 0.6050 support.
NZDUSD Technical Analysis – 1-Hour Timeframe
NZDUSD 1 hour
On the 1-hour chart, we can more clearly see the recent price action as the US dollar has been feeling the pressure from expectations of a 50bp rate cut since last Thursday. The red lines mark the average daily range for the day.
Upcoming incentives
Today, we have the FOMC interest rate decision, and tomorrow, we get New Zealand Q2 GDP and the latest US jobless claims numbers.
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