- The Fed raised rates by 25 basis points as expected and left everything unchanged at the last meeting.
- Fed Chairman Powell reaffirmed their reliance on data and kept all options on the table.
- Last week’s US CPI came in line with expectations, so market prices remained about the same.
- The job market has shown signs of slowing, although it remains relatively strong.
- Other important economic data like the ISM Services PMI, jobless claims and retail sales have all recently exceeded expectations.
- Fed members are leaning towards a pause in September and the next decision will always be dictated by economic data.
- The market does not expect the Fed to raise rates at the September meeting, but there is now a 50/50 chance of a hike in November.
- The RBNZ kept its policy rate unchanged at the last meeting, while saying it would remain at a restrictive level for the foreseeable future to ensure inflation returned to its target.
- Recent New Zealand inflation and employment data surprised to the upside, but PMIs continue to slide towards contraction.
- Wage growth has also exceeded expectations and is something central banks are watching closely.
- Recent retail sales in New Zealand have exceeded expectations, although the data remains deeply negative.
- The RBNZ is expected to keep its policy rate stable at the next meeting.
NZDUSD Technical Analysis – Daily Timeline
On the daily chart, we can see that the NZDUSD pair is currently pulling back after a huge sell-off from key resistance at 0.6389. The divergence with the MACD was a signal that the bearish momentum was weakening and a correction was necessary. The red moving average 21 is currently acting as dynamic resistance, but a break above it should lead to a rally towards the 0.60 handle.
NZDUSD Technical Analysis – 4 Hour Timeframe
On the 4 hour chart we can see that on this time frame we have an upward trend as the price is printing higher highs and higher lows. Although price action remains complicated, we have clear and defined levels. In fact, a break above the 0.5933 resistance should lead to a rally towards the next resistance around the 0.60 handle. This is where we should find strong sellers accumulating with defined risk above the level to target new lows.
NZDUSD Technical Analysis – 1 Hour Timeframe
On the hourly chart, we can see the range between the support of 0.5895 and the resistance of 0.5933. The price has been stuck in this range for over a week and at some point we should see a breakout.
Events to come
This week contains only a few important economic releases, with tomorrow’s FOMC rate decision being the highlight. The Fed is expected to keep rates unchanged and the market will focus more on the Dot Plot and Fed Chairman Powell’s press conference, although he is likely to reiterate that they remain data dependent. Moving on to Thursday we will see another report on US jobless claims, while on Friday we conclude the week with US PMI data.