NZDUSD Technical Analysis – The markets await the US PPI for more clarity

Fundamental Overview

The US CPI yesterday missed expectations across the board but the details that feed into the Core PCE were less encouraging with early estimates increasing. The price action in the USD has been mixed following the data release as the markets are likely waiting for the US PPI today to get better estimates for the PCE.

On the NZD side, we haven’t got much in terms of new data. As a reminder, the RBNZ cut interest rates by 50 bps as expected at the last meeting but Governor Orr sounded less dovish than expected as the central bank wants to slow the pace of easing as they approach their estimated neutral rate. The market sees a total of 65 bps of easing by year-end.

NZDUSD Technical Analysis – Daily Timeframe

On the daily chart, we can see that NZDUSD continues to range. From a risk management perspective, the sellers will have a better risk to reward setup around the 0.5850 level to position for a drop into new lows. The buyers, on the other hand, will want to see the price breaking higher to increase the bullish bets into the 0.60 handle next.

NZDUSD Technical Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that we have a support zone around the 0.5680 level. If we get a pullback into it, we can expect the buyers to step in with a defined risk below the level to position for a rally into the 0.5850 level next. The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets into the lows.

NZDUSD Technical Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that we have a minor resistance around the 0.5741 level. The sellers will likely lean on the resistance with a defined risk above it to target the support, while the buyers will look for a break higher to increase the bullish bets into the 0.5850 level. The red lines define the average daily range for today.

Upcoming Catalysts

Today we get the US PPI data and the US Jobless Claims figures. Tomorrow, we conclude the week with the University of Michigan Consumer Sentiment report.