Fundamental
Overview
The bullish momentum in the
US Dollar seems to be waning despite the recent higher-than-expected US CPI and PPI reports. One caveat is that the market has now
priced out the aggressive rate cuts expectations and it’s almost perfectly in
line with the Fed’s projections.
Therefore, we will likely
need more strong US data to see the market pricing in an earlier pause in the
Fed’s easing cycle and give the US Dollar a further boost.
In the bigger picture, it
looks like the US long term yields are bound to rise further, which should keep
the recent uptrend in the USD intact, but more bullish catalysts for the
greenback would give more conviction for the buyers.
The next big risk events
will be in November when we get the October data and the US election.
On the NZD side, the RBNZ recently
cut interest rates by 50 bps as expected. The market
is pricing an 88% probability of another back-to-back 50 bps cut in November.
NZDUSD
Technical Analysis – Daily Timeframe
NZDUSD Daily
On the daily chart, we can
see that NZDUSD is consolidating around the key 0.6050 support zone. This is where we can expect the buyers
to step in with a defined risk below the support to position for a rally into
the 0.6217 resistance. The sellers, on the other hand, will want to see the
price breaking lower to increase the bearish bets into the 0.5850 support next.
NZDUSD Technical
Analysis – 4 hour Timeframe
NZDUSD 4 hour
On the 4 hour chart, we can
see more clearly the rangebound price action as the bearish momentum waned. We have
the 0.61 handle acting as resistance here so a break above it will likely see
the buyers increase the bullish momentum into the 0.6217 resistance.
NZDUSD Technical
Analysis – 1 hour Timeframe
NZDUSD 1 hour
On the 1 hour chart, there’s
not much more we can glean from this timeframe as the market participants will
likely keep on playing the range until we get a breakout. Watch out for the New
Zealand CPI later in the day. The red lines define the average daily range for today.
Upcoming
Catalysts
This week is pretty empty on the data front with just a couple of key economic
releases. Today, we get the New Zealand Q3 CPI report. On Thursday, we have the
US Retail Sales and US Jobless Claims data.