FundamentalOverview
The USD got a boostyesterday following an ugly USISM Manufacturing PMI as the markets went into risk-off. Overall, we had goldilocks data releasesuntil now with an economy that’s been slowing but still growing. So, one badreport might not be a gamechanger, but the markets are increasingly sensitiveto bad news in this part of the cycle.
On the monetary policyfront, we had the FOMC rate decision on Wednesday and as expected it wasa dovish one. Fed Chair Powell hinted to a September rate cut and didn’t evenclose the door for “several” rate cuts before the end of the year. The markethas now fully priced in three rate cuts by the end of the year and continues toraise the chances of a 50 bps cut in September.
The NZD, on the other hand,has been on a steady fall as we got the unwinding of the Yen carry trades and generalrisk-off sentiment. On the monetary policy front, the last RBNZ policy decision weighed on the Kiwi as the centralbank changed slightly its language to a more dovish leaning which increased therate cuts expectations.
NZDUSDTechnical Analysis – Daily Timeframe
On the daily chart, we cansee that NZDUSD bounced around the April’s lows at 0.5850 and extended thegains into the 0.5980 level before pulling back on weak US data and generalrisk-off moves.
From a risk managementperspective, the sellers will have a much better risk to reward setup aroundthe 0.6050 resistancezone where we can also find the confluenceof the trendlineand the 61.8% Fibonacciretracement level. The buyers, on the other hand, will want to see theprice breaking above that strong resistance to increase the bullish bets intothe 0.6217 level next.
NZDUSD TechnicalAnalysis – 4 hour Timeframe
On the 1 hour chart, we cansee that we have also the 50% Fibonacci retracement level adding confluence tothe trendline. This 0.5930 support zone will be key in the short-term as a strongbounce will likely lead to a rally into the major resistance, while a breaklower should take the pair back to the 0.5850 lows. The red lines define the average daily range for today.
UpcomingCatalysts
Today we conclude the week with the US NFP report where the consensus expects175K jobs added in July and the Unemployment Rate to remain unchanged at 4.1%.
