consistently surprising to the upside since the last FOMC meeting. Coupled with
the Fed’s message of more rate hikes coming in case the data remains strong,
the market started to price in a more hawkish path for interest rates and this
repricing favoured the US Dollar. The RBNZ, on the other hand, paused at the
last meeting, so this is creating a bit of a policy divergence and leading to a
lower NZDUSD rate.
NZDUSD Technical Analysis –
Daily Timeframe
On the daily chart, we can see that NZDUSD has been
falling consistently since the middle of June and the target now looks to be
the 0.5987 low. The moving averages have
crossed to the downside signalling a change in trend. At the moment, it’s a
sellers’ market so it’s more likely to see the pullbacks getting faded as the
market prices in a more hawkish path for the Fed.
NZDUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that eventually
NZDUSD couldn’t break the bullish flag to the
upside and instead broke down, invalidating the bullish setup and opening the
door for a fall into the 0.5987 support. Now, we
should see the sellers stepping in here at the previous support turned resistance with a
defined risk above the resistance zone where we can find a strong confluence from the
red 21 moving average, the 38.2% Fibonacci retracement level
and the broken lower bound of the channel. The buyers, on the other hand, will
need the price to break above the resistance to get some conviction on further
upside and target the upper bound of the channel.
NZDUSD Technical Analysis –
1 hour Timeframe
On the 1 hour chart, we can see more
closely the resistance zone and notice that there’s also the round 0.61 number giving
further strength to this area. In fact, a break to the upside would be more
meaningful than a rejection because it would show a lot of strength and a rally
will be more likely. Today, we have the US
PCE report and lower than expected figures should weaken the USD in the short
term, while higher than expected reading should strengthen it.
This article was written by FL Contributors at www.forexlive.com.
