Fundamental
Overview
The US Dollar continues to
consolidate around the highs as the market reached the peak in the repricing of
interest rates expectations and it will need stronger reasons to price out the
remaining rate cuts for 2025.
This was signalled by the
lack of US Dollar strength after lots of strong US data with the market’s
pricing remaining largely unchanged around three rate cuts by the end of 2025.
We might see the greenback remaining on the backfoot at least until the US CPI
due next week.
Yesterday, Fed’s Waller and Fed’s Williams sounded like a rate cut in December
is basically a done deal with the plan to slow the pace of rate cuts
considerably in 2025. We will likely need another hot CPI report to force them
to skip the December cut.
On the NZD side, the RBNZ cut interest rates by 50 bps as expected
recently but overall was less dovish than the market’s aggressive view. Right
now, the market sees a 67% chance of a 25 bps cut in February 2025 and a total
of 88 bps of easing by the end of next year.
NZDUSD
Technical Analysis – Daily Timeframe
NZDUSD Daily
On the daily chart, we can
see that NZDUSD probed above the key resistance zone around the 0.5912 level but
eventually failed to sustain the breakout. The buyers will want to see the
price breaking higher to increase the bullish bets into the 0.6050 level next.
The sellers, on the other hand, will likely continue to step in around the
resistance to target a drop into the 0.5773 level.
NZDUSD Technical
Analysis – 4 hour Timeframe
NZDUSD 4 hour
On the 4 hour chart, we can
see that the recent price action formed an inverse head
and shoulders. This is generally a signal of a loss in momentum, but the
price will need to break above the neckline around the 0.5912 level to potentially
trigger a rally into the 0.6050 resistance next.
NZDUSD Technical
Analysis – 1 hour Timeframe
NZDUSD 1 hour
On the 1 hour chart, we can
see that we have a minor support zone around the 0.5885 level where the price
reacted from several times in the past days. The buyers will likely step in here
to position for the break above the resistance. The sellers, on the other hand,
will look for a break lower to target a drop into the lows. The red lines
define the average daily range for today.
Upcoming
Catalysts
Today,
we get the US Job Openings data. Tomorrow, we have the US ADP, the US ISM
Services PMI and Fed Chair Powell speaking. On Thursday, we get the latest US
Jobless Claims figures. Finally, on Friday, we conclude the week with the US
NFP report.