NZDUSD Technical Analysis – We remain stuck in a range

Fundamental Overview

The USD got a boost across the board yesterday following the higher than expected US CPI report. The greenback couldn’t extend into new highs though as the market was aware of the “January-effect” and therefore didn’t put much weight on this particular release.

What weigh more on the market were the positive headlines on the reciprocal tariffs as the White House adviser Hassett said that the reciprocal tariffs were a work in progress and conversations with other countries began earlier that day, potentially implying negotiations.

Moreover, we got a very positive post from Trump saying that he had a call with Putin and the tone of it was upbeat on a peace deal in the Russia-Ukraine war. He was even invited to Moscow. That helped the risk sentiment and weighed on crude oil (less inflationary pressures).

On the NZD side, the New Zealand Q4 CPI report recently came in slightly below expectations while the Employment report showed another increase in the unemployment rate although it was expected. The market is pricing a 51% chance of a 50 bps cut at the upcoming meeting and a total of 105 bps of easing by year end. After this 50 bps cut, the central bank will likely slow the pace of easing.

NZDUSD Technical Analysis – Daily Timeframe

On the daily chart, we can see that NZDUSD continues to range between the 0.55 handle and the 0.57 resistance. The price action has been very choppy, but it also looks like the pair is in a bottoming out process as it weathered lots of negative catalysts. The market participants will likely wait for a breakout on either side and then go with the flow.

NZDUSD Technical Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that we have minor downward trendline defining the current pullback from the resistance. The sellers will likely continue to lean on the trendline to push into new lows, while the buyers will want to see a break higher to target a move above the resistance.

NZDUSD Technical Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that we have a support zone around the 0.5630 level even though we got a spike below it on the CPI release. The buyers will likely step in around the support to position for a rally into the resistance, while the sellers will look for a break lower to increase the bearish bets into the 0.55 handle next. The red lines define the average daily range for today.

Upcoming Catalysts

Today we get the US PPI, the latest US Jobless Claims figures and the Trump’s reciprocal tariffs announcement. Tomorrow, we conclude the week with the US Retail Sales data.