NZDUSD Technical Analysis – Key support in sight

US:

• The Fed left interest rates unchanged as expected at the last meeting.
• The macroeconomic projections were revised higher,
  and the Dot Plot showed that the FOMC still expects another rate hike by the
  end of the year with less rate cuts in 2024.
• Fed Chair Powell reaffirmed their data dependency but added that
  they will proceed carefully.
• The US CPI yesterday beat expectations on the
  headline figures, but the core measures came in line with forecasts and the
  market’s pricing barely changed.
• The labour market remains fairly solid as seen last week with the NFP report
  and yesterday’s Jobless Claims.
• The ISM Manufacturing PMI beat expectations while the ISM Services PMI came in line with forecasts in another sign that
  the US economy remains resilient.
• The Fed members continue to cite elevated long-term
  yields as a reason to proceed carefully and likely pause in November as well.
• The market doesn’t expect the Fed to hike anymore.

New Zealand:

• The RBNZ kept its official cash rate
  unchanged while
  stating that demand growth continues to ease and it’s expected to decline
  further with monetary conditions remaining restrictive.
• The recent New Zealand inflation and employment data surprised to the upside but
  the PMIs continue to slide further into contraction as seen also today with the
  Manufacturing PMI.
• The wage growth has also missed
  expectations and it’s something that the central banks are watching closely.
• The recent New Zealand Retail Sales beat expectations although the data
  remains deeply negative.
• The RBNZ is expected to keep the
  cash rate steady at the next meeting as well.

NZDUSD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that the NZDUSD pair
couldn’t break above the recent high at 0.6050 and got smacked back down.
Yesterday the pair sold off following the US CPI release, but the reaction was
a bit perplexing as the core measures came in line with expectations and the
market’s pricing hasn’t changed. If that was just an overreaction, we might see
the pair going back up and erase the post-CPI losses in the next few days.

NZDUSD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that as soon as the
pair broke the upward trendline, the
sellers piled in to target the lows, and the bearish momentum increased
following the break of the 0.60 handle and the US CPI release. If the bias has
indeed switched to the downside, the sellers are likely to lean on the downward
trendline where there’s also the confluence with the
38.2% Fibonacci retracement level
and the red 21 moving average.

NZDUSD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that the
bearish momentum seems to be waning as the price is diverging with
the MACD. The
buyers don’t have much to lean onto other than waiting for the price to break
above the trendline to invalidate the bearish setup and start looking forward
to new highs. If the price continues lower though and reaches the lows around
the 0.5860 level, the buyers should step in more aggressively with a defined
risk below the low and position for a rally into the previous high at
0.6050.

Upcoming Events

Today the only notable event on the agenda is the
University of Michigan Consumer Sentiment report although it has lost its
market moving ability lately. Only big surprises are likely to have an impact
on the market.