The strong USD weakness seen after the error in the US CPI report was completely erased as the US data printed on the hot side US Retail Sales Review Group exceeded expectations by a wide margin and Initial US Claims is returning to record low levels. Yesterday, US PMI painted a mixed picture as the services PMI missed expectations, although it remained in expansion, and the manufacturing PMI jumped from 46.2 to 49.0, almost returning to expansion.

The RBNZon the other hand, it left its official cash rate unchanged, saying it would remain at a restrictive level for the foreseeable future to ensure inflation falls back to target. Recent New Zealand inflation however, the data surprised to the upside, which could put some pressure on the central bank in its next rate decision.

NZDUSD Technical Analysis – Daily Time Frame

NZDUSD daily

On the daily chart, we can see that the NZDUSD sold off quite strongly from the key resistance at 0.6389 all week, erasing any gains made after the US CPI report was missed. We finally saw a rebound yesterday, but the bias remains bearish at the moment.

NZDUSD Technical Analysis – 4 Hour Time Frame

NZDUSD 4 hours

On the 4-hour chart, we can see that the price broke below the strong support zone at 0.6220 and is now coming back to retest the level. We have a good confluence here with the descending trendline, 38.2% Fibonacci retracement level and the red moving average of 21 adds strength to the resistance. This is where sellers should pile in with defined risk above resistance and target the 0.6050 swing low. On the downside, buyers will need the price to break through the resistance with conviction to jump on board and target the 0.6389 level.

NZDUSD Technical Analysis – 1 Hour Time Frame

NZDUSD 1 hour

On the 1-hour chart, we can see the resistance zone more closely, when the price is already reacting to the level. More conservative sellers may want to wait for the price to break below the rising countertrend line to pile in and target the 0.6050 level. On the other hand, buyers will have stronger confirmation for a resumption of the uptrend if the price rises above the 61.8% Fibonacci retracement level and the last swing high at 0.6239.

Upcoming events

Today, the only major event will be the US consumer confidence report, where the market will want to see if last month’s incredibly strong report was just a blip. The Fed is expected to hike by 25 bps tomorrow and the market will focus on any sign of a pause or another rate hike. On Thursday it will be time for another US Jobless Claims report, while on Friday we finish the week with the US PCE and ECI reports.

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