NZDUSD Technical Analysis

Fundamental
Overview

The USD got a boost last
week from the strong US PMIs which lifted Treasury yields and put in
question the rate cut in September. Once the market digested the report though
and saw that there was more good news on the growth side than bad news on
inflation, the USD strength faded as the risk-on sentiment ensued.

The NZD, on the other hand, remains supported from the hawkish RBNZ decision where the central bank
pushed further out the timing for a rate cut and even added that they
considered a rate hike. Moreover, the risk-on sentiment is supportive for
commodity currencies like the NZD, so else being equal, we could see even
higher prices ahead.

NZDUSD Technical
Analysis – Daily Timeframe

On the daily chart, we can
see that NZDUSD eventually bounced on the trendline
and extended the rally into new highs. The first target for the buyers should
be the swing high at 0.6217 with a further break above it opening the door for
a rally into the 0.6370 level. The sellers will need to see the price falling
below the trendline to gain more conviction and start targeting a drop back into
the 0.6050 level.

NZDUSD Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that more clearly the bounce on the trendline where we had also the 38.2% Fibonacci
retracement level for confluence.
From a risk management perspective, if we see a pullback from the current
levels, the buyers will likely step in around the trendline with a defined risk
below it and position for a continuation of the rally into the 0.6217 level.
The sellers, on the other hand, should wait for a bearish catalyst or a break
below the trendline before piling in with more conviction.

NZDUSD Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that we have a minor trendline which is acting as support for the current
bullish momentum. The buyers will likely keep on leaning on it as long as it
holds. If the price were to fall below the trendline, it will likely be a
signal for a bigger correction with the first target around the major trendline.
The red lines define the average
daily range for today.

Upcoming
Catalysts

Today we get the US Consumer Confidence report where the
focus will likely be on the labour market details. On Thursday, we will see the
latest US Jobless Claims figures. Finally on Friday, we conclude the week with the
US PCE report.

This article was written by Giuseppe Dellamotta at www.forexlive.com.