Basic overview
USD:
Last week, the much-anticipated US NFP report was released alongside somewhat disappointing US CPI figures. This led to heightened market speculation around a potential rate cut, with estimates suggesting around 62 basis points of easing could occur by year-end. Yet, the data doesn’t firmly indicate this direction; we really need more information to either back this up or show it’s off base.
The US dollar mostly fluctuated within a limited range, showing mixed results against major currencies since the new data didn’t alter the overall landscape much. As we move forward, future outlooks will hinge on forthcoming data releases.
This Friday is set to be significant as the US plans to unveil preliminary PMI and Q4 GDP figures. There’s also the possibility of a Supreme Court ruling concerning President Trump’s tariffs.
New Zealand dollar:
For the New Zealand dollar, most analysts anticipate the RBNZ will maintain the OCR at 2.25% during Wednesday’s meeting. The bank’s previous guidance indicated a hold until 2026, though the market seems to disagree, predicting a tightening of 37 basis points by year-end. Economic conditions appear to be improving, perhaps signifying that New Zealand is on an upward trajectory. Governor Breman’s recent remarks were rather neutral, stressing the need for patience and discretion. Much of the NZD’s strength can be attributed to the weaker US dollar and its close ties to the Australian dollar.
NZDUSD Technical Analysis – Daily Timeframe
Looking at the daily chart, NZDUSD seems to be stabilizing near recent highs following a strong rally in late January. There’s not a lot to interpret from this phase, so closer examination is required.
NZDUSD Technical Analysis – 4 Hour Timeframe
The 4-hour chart reveals a key swing point around the 0.5995 mark that indicates bullish momentum in this timeframe. From a risk management angle, it could be somewhat risky for buyers to target that level while preparing for a potential rally to new cycle highs. Conversely, sellers are eyeing a downside breach at the 0.5928 level.
NZDUSD Technical Analysis – 1 Hour Time Frame
On the 1-hour chart, an upward trend line indicates the current consolidation phase. Buyers will likely remain close to this line while navigating potential risks as they aim for new highs. Meanwhile, sellers will track for a drop to the 0.5995 level, with the red line indicating today’s average daily range.
Future catalyst
This Wednesday, we can expect the release of RBNZ policy decisions and FOMC minutes. The latest US unemployment claims figures will come out on Thursday. Finally, Friday wraps up the week with several important releases: US Q4 GDP, US PCE Price Index for December, US preliminary PMI, and the potential ruling from the Supreme Court regarding President Trump’s tariffs.
