NZDUSD Technical Analysis – Lower lows in sight


  • The Fed hiked by 25 bps as
    expected and kept everything unchanged.
  • Fed Chair Powell reaffirmed their data dependency
    and kept all the options on the table.
  • The US economic data keeps on surprising to the
    upside, but inflation expectations and CPI readings continue to show
    disinflation with the last two Core CPI M/M figures
    coming in at 0.16%.
  • The US PMIs missed
    expectations across the board and brought down Treasury yields weakening the US
    Dollar, but the US Jobless Claims came out
    better than expected once again and supported the USD.
  • At the moment, the market doesn’t expect another
    hike from the Fed, but the next NFP and CPI data will be crucial to confirm or
    change this view.

New Zealand:

  • The RBNZ kept its official cash rate unchanged while
    stating that it will remain at the restrictive level for the foreseeable future
    to ensure that inflation comes down back to target.
  • The recent New Zealand inflation and employment data surprised to the upside but
    the PMIs are in contraction with the Services PMI last week plunging into
  • The wage growth has also missed
    expectations and it’s something that the central banks are watching closely for
    second round effects.
  • The New Zealand Retail Sales beat expectations although remain
    deeply negative.
  • The RBNZ is expected to keep the
    cash rate steady at the next meeting.

NZDUSD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that after breaking
the May low and falling into the 0.59 handle, NZDUSD rallied back to retest the
broken support now turned resistance before
restarting the downtrend. The sellers are firmly in control and the breakout
opened the door for a fall into the 0.5514 level.

NZDUSD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that the price has
been diverging with the
MACD for a
while. This is generally a sign of weakening momentum often followed by
pullbacks or reversals. In this case, we got the pullback into the trendline where we
had also the confluence with the
38.2% Fibonacci retracement level.
This is where the sellers piled in with a defined risk above the level to
target new lows. The buyers will need the price to break above the trendline to
switch the bias from bearish to bullish and start targeting new higher highs.

NZDUSD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that the
price is bouncing from the previous low. A good resistance for the sellers
might be the one around the 0.5925 level where the price has reacted to
multiple times and where we can also find the red 21 moving average for
confluence. More conservative sellers may want to wait for the price to break
below the recent low to pile in and target new lows.

Upcoming Events

Today the only major
event is Fed Chair Powell’s speech at the Jackson Hole Symposium. The
expectations though are for him to take a “wait and see” approach as we have
more key economic data ahead before the next FOMC meeting.

This article was written by FL Contributors at Source