The US Dollar’s bullish momentum appears to be slowing down despite the recent higher-than-expected US CPI and PPI reports. The market has adjusted its expectations for aggressive rate cuts and is now in line with the Fed’s projections. This means that strong US data will be needed to see the market pricing in an earlier pause in the Fed’s easing cycle and give the US Dollar a further boost. In the bigger picture, it seems that US long term yields are set to rise, which should support the recent uptrend in the USD. However, additional bullish catalysts for the greenback would provide more confidence for buyers. The next major risk events to watch for will be in November when we receive the October data and the US election outcomes.
On the other hand, the Reserve Bank of New Zealand (RBNZ) recently cut interest rates by 50 bps as anticipated. The market is currently pricing in an 88% probability of another back-to-back 50 bps cut in November.
Technical Analysis for NZDUSD:
Daily Timeframe:
On the daily chart, NZDUSD is consolidating around the key 0.6050 support zone. Buyers are expected to step in at this level with a defined risk below the support to position for a rally towards the 0.6217 resistance. Sellers, on the other hand, will be looking for a break below the support to increase bearish bets towards the 0.5850 support level.
4-hour Timeframe:
The 4-hour chart shows rangebound price action as bearish momentum weakens. The 0.61 handle is acting as resistance, and a break above it could see buyers pushing towards the 0.6217 resistance level.
1-hour Timeframe:
There isn’t much new information on the 1-hour chart, as market participants are likely to continue trading within the range until a breakout occurs. Keep an eye out for the New Zealand CPI report later in the day. The red lines on the chart indicate the average daily range for today.
Upcoming Catalysts:
This week’s economic calendar is relatively light, with only a few key releases. Today, we are expecting the New Zealand Q3 CPI report. On Thursday, US Retail Sales and US Jobless Claims data will be released.
Overall, the NZDUSD pair is currently consolidating with potential for breakouts in either direction depending on upcoming economic data and market sentiment. Traders should closely monitor key support and resistance levels for potential trading opportunities.
