Fundamental Overview
The USD got boosted once again by negative tariffs news yesterday as Bessent talked about universal tariffs starting at 2.5% and gradually increasing by the same amount every month, which eventually could reach 20%. Trump later doubled down on that saying that he wants tariffs much bigger than 2.5%.
The tariffs risk has been the only thing keeping a bid under the US Dollar after the US inflation data marked the top in the repricing of rate cuts expectations. So, when this risk eases, the greenback weakens and vice versa. Today, we have the FOMC decision where the central bank is expected to keep rates steady. If Fed Chair Powell sounds more dovish, we could see the greenback weakening again.
On the NZD side, the New Zealand Q4 CPI report last week came in slightly below expectations although it didn’t change much in terms of market pricing. As a reminder, the RBNZ cut interest rates by 50 bps as expected at the last meeting. The market is pricing a 60% chance of a 25 bps cut in February and a total of 105 bps of easing by year end.
NZDUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that NZDUSD seems to be making a broadening wedge at the lows. This is generally a continuation pattern, so a break below the 0.55 handle could see the sellers becoming aggressive again. The buyers, on the other hand, will likely step in around the lows to position for a rally into the 0.57 handle with a better risk to reward setup.
NZDUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have a support zone around the 0.5650 level. The buyers will likely step in here with a defined risk below the level to position for a rally into new highs. The sellers, on the other hand, will look for a break lower to increase the bearish bets into the trendline around the 0.5620 level.
NZDUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see we have a downward trendline defining the current bearish momentum on this timeframe. The sellers will continue to 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 have the FOMC Policy Decision. Tomorrow, we get the US Q4 GDP report and the latest US Jobless Claims figures. On Friday, we conclude the week with the US PCE and the US Employment Cost Index.
This article was written by Giuseppe Dellamotta at www.forexlive.com. Read More Details
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