Fundamental
Overview
The USD got a
boost from the strong US Consumer Confidence data which triggered an aggressive rise in long term
Treasury yields. The report however just showed that the labour market remains
resilient which is good news for growth and not necessarily bad news for
inflation. The greenback benefited also from the risk-off sentiment which looks
increasingly likely that it was caused more by the month-end flows rather than
a fundamental driver.
The NZD, on the other hand,
remains supported from the hawkish RBNZ decision where the central bank pushed
further out the timing for a rate cut and even added that they considered a
rate hike. Moreover, the risk-on sentiment is supportive for commodity
currencies like the NZD, so if it this were to continue, we could see even more
gains ahead for the Kiwi.
NZDUSD
Technical Analysis – Daily Timeframe
NZDUSD Daily
On the daily chart, we can
see that NZDUSD continues to consolidate in a roughly 60 pips range as traders
await a breakout to get things going. The price recently fell below the trendline
which increased the risk of a bigger correction to the downside, although the
price will need to break below the 0.6080 level to confirm it and see the bearish
momentum increasing. For now, the buyers remain in control with the 0.6218
level being the first target.
NZDUSD Technical
Analysis – 4 hour Timeframe
NZDUSD 4 hour
On the 4 hour chart, we can
see that more clearly the rangebound price action with the latest bounce on the
0.6084 support
as the risk mood improved yesterday with falling Treasury yields. It looks
increasingly likely that the price action of the past couple of days was caused
mainly by month-end flows.
NZDUSD Technical
Analysis – 1 hour Timeframe
NZDUSD 1 hour
On the 1 hour chart, we can
see that we got a breakout recently but all the gains were erased as the risk
sentiment soured. The buyers stepped in again around the support to position
for another breakout and target the 0.6218 level. The sellers, on the other
hand, will likely pile in around the resistance to position for a drop back
into the support and target a break lower. The red lines define the average daily range for today.
Upcoming
Catalysts
Today we conclude the week with the US PCE report. This
report is unlikely to change anything for the Fed as the central bank remains
in a “wait and see” mode. If we get a good report though (or even in line), we
might see the risk-on sentiment coming back. On the other hand, hotter than
expected figures might weigh on the sentiment a bit.