Fundamental
Overview
The USD weakened across the
board yesterday following the softer than expected US
Core CPI data as Treasury yields fell aggressively in what could be the
peak in inflation hysteria and repricing in rate cuts expectations.
Strangely enough, the US
Dollar eventually erased all the losses and ended the day pretty much flat
almost across the board. This was a USD-only reaction as Treasury yields continue
to trade around the post-CPI lows while US equities extended the gains.
There’s no clear reason why
the US Dollar reacted in such a way. The market pricing shows now 37 bps of
easing by year end compared to 31 bps before the US CPI report.
On the NZD side, we haven’t
got any key data release from New Zealand yet but as a reminder, the RBNZ cut interest rates by 50 bps as expected at
the last meeting. The market continues to price in an 85% chance of a 50 bps
cut in February but the total easing for this year was scaled back from 125 bps
to 105 bps now.
NZDUSD
Technical Analysis – Daily Timeframe
NZDUSD Daily
On the daily chart, we can
see that NZDUSD spiked into the major trendline yesterday but got rejected as
the sellers stepped in with a defined risk above the trendline to position for
a drop into the 2020 lows around the 0.55 handle. The buyers will need the
price to break above the trendline to regain control and start targeting new
highs.
NZDUSD Technical
Analysis – 4 hour Timeframe
NZDUSD 4 hour
On the 4 hour chart, we can
see that we have a support zone around the 0.5585 level where the price got
rejected from several times in the past weeks. This is where we can expect the
buyers to step in with a defined risk below the support to position for a break
above the trendline. The sellers, on the other hand, will want to see the price
breaking lower to increase the bearish bets into the 0.55 handle.
NZDUSD Technical
Analysis – 1 hour Timeframe
NZDUSD 1 hour
On the 1 hour chart, we can
see that we have a minor downward trendline defining the current pullback into
the support. The sellers will likely lean on it to keep pushing into new lows,
while the buyers will look for a break higher to increase the bullish bets into
new highs. The red lines define the average daily range for today.
Upcoming
Catalysts
Today, we get the latest US Jobless Claims figures and the US Retail Sales
data.