US data has consistently surprised to the upside since the last FOMC meeting. Coupled with the Fed’s message of further rate hikes if the data remains strong, the market started to price interest rates in a more hawkish way and this revaluation favored the US dollar. On the other hand, the RBNZ paused at the last meeting, so that creates a bit of policy divergence and leads to a lower NZDUSD rate.
NZDUSD Technical Analysis – Daily Time Frame
On the daily chart, we can see that the NZDUSD has been steadily declining since mid-June, and the target now looks to be a low of 0.5987. The moving averages have moved to a declining level, which signals a change in trend. It’s a seller’s market at the moment, so it’s more likely that the declines will fade as the market prices a hawkish path for the Fed.
NZDUSD Technical Analysis – 4 Hour Time Frame
On the 4-hour chart, we can see that the NZDUSD ultimately failed to break bull flag up and instead broke down, invalidating the bullish setup and opening the door for a drop to the 0.5987 support. Now we should see how sellers entered here on the previous one support turned resistance with defined risk above the resistance zone where we can find a strong confluence from the red moving average of 21, 38.2% Fibonacci retracement level and the broken lower limit of the channel. On the flip side, buyers will need the price to break above the resistance to gain some conviction for further upside and focus on the upper boundary of the channel.
NZDUSD Technical Analysis – 1 Hour Time Frame
On the 1 hour chart we can see closer to the resistance zone and notice that it is there as well round 0.61 number gives this area extra power. In fact, a breakout to the upside would make more sense than a rejection because it would show a lot of strength and a rally is more likely. Todaywe have the US PCE report and lower than expected readings should weaken the USD in the short term while higher than expected readings should strengthen it.