eventually the pause in its tightening cycle from the Fed led to a big weakness
in the USD that helped the other major currencies to rally. Although the Fed
has signalled that two more rate hikes might come in the Dot Plot, the market
doesn’t see such a chance due to the recent weakness in the economic data. All
else being equal, the Fed might even skip the July hike if the disinflationary
trend continues, and the labour market data keeps on weakening.
NZDUSD Technical Analysis –
Daily Timeframe
On the daily chart, we can see that the NZDUSD had
a pretty strong rally since the first hints of a pause in June from a couple of
Fed members. The price has recently broken above the 0.6182 resistance but
pulled back as the rally got overstretched. We may now see a classic “break and
retest” of the broken resistance turned support and
another rally into the 0.63 handle.
NZDUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price has
pulled back into support where we can also find confluence with the
38.2% Fibonacci retracement level
and the lower bound of the regression channel. This is where we should see the
buyers piling in with a defined risk below the Fibonacci level and target the
0.63 level. The sellers, on the other hand, may want to wait for the price to
break below the Fibonacci level to get more conviction and target the 0.6085
support.
NZDUSD Technical Analysis –
1 hour Timeframe
On the 1 hour chart, we can see that we
have a downtrend on this timeframe as the moving averages are
crossed to the downside and the price is making lower lows and lowers highs.
The price has recently pulled back into a previous swing low level where there
is also confluence of the red 21 moving average and the trendline. This
is where more aggressive sellers should enter the market targeting a break
below the support zone and new lows. The buyers, will need to break above this
trendline to switch the momentum to the upside and target the 0.63 handle.
This week
is pretty bare on the data front with just the US Jobless Claims on Thursday
and the US PMIs on Friday. We will also hear from many Fed officials including
Fed Chair Powell who’s expected to testify to Congress on Wednesday and
Thursday.
This article was written by FL Contributors at www.forexlive.com.