Fundamental Overview
The USD has been marginally weaker recently due to lower than expected US inflation figures last week that sent Treasury yields lower and made the market to price in higher chances of a second rate cut by the end of the year.
Yesterday, the greenback weakened across the board following a
WSJ report saying that Trump would lay out the trade vision but won’t impose tariffs yet. Tonight though, he spoke to the media and said that
he intends to impose 25% tariffs on Canada and Mexico next week. Following the news, the US Dollar erased almost all the losses from the prior day.
On the NZD side, as a reminder, the
RBNZ cut interest rates by 50 bps as expected at the last meeting. The market is pricing a 52% chance of a 50 bps cut in February and a total of 105 bps of easing by year end.
Today we get the New Zealand Q4 CPI report which is going to influence the interest rate expectations for the RBNZ.
NZDUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that NZDUSD spiked into the
trendline yesterday but got rejected as the sellers stepped in with a defined risk above the trendline to position for a drop into the 2020 lows around the 0.55 handle. The buyers will need the price to break above the trendline to regain control and start targeting new highs.
NZDUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the pair failed to break above the key
resistance zone around the 0.5680 level. Again, the buyers will need to break above that resistance to open the door for new highs, while the sellers will continue to defend the level and position for new lows.
NZDUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the price broke below the upward minor trendline that was defining the bullish momentum on this timeframe. The buyers will likely step in around the 0.5620 support to position for the break above the resistance. The sellers, on the other hand, will look for a break lower to increase the bearish bets into new lows. The red lines define the
average daily range for today.
Upcoming Catalysts
Today we have the New Zealand Q4 CPI report. On Thursday, we get the latest US Jobless Claims figures, while on Friday we conclude the week with the Flash US PMIs.
This article was written by Giuseppe Dellamotta at
www.forexlive.com.
