NZDUSD Technical Analysis - The sellers are eyeing new lows

[Forex News]

Lastweek, the NFP missedexpectations for a second time in a row and the previous numbers were allrevised lower. This was seen as a disappointment as the labour market seems tobe a touch weaker than previously expected. Nevertheless, the unemployment ratefell once again and lessened the disappointment from the miss in the payrollsnumber. The worse part for the Fed is that the average hourly earnings beatexpectations, and such high wage growth is not consistent with a sustainablereturn to the 2% target. It’s worth reminding though, that the Fed will seeanother NFP report before the September meeting, so this NFP doesn’t change much,but the data leading into the meeting can still weigh on sentiment.

The RBNZ, on the other hand, kept its official cashrate unchanged while stating that it will remain at the restrictive level forthe foreseeable future to ensure that inflation comes down back to target. Therecent New Zealand inflation and employment data though surprised to the upsidewhich might put some pressure on the central bank at the next rate decision,although they are more likely to keep rates steady.

NZDUSD Technical Analysis –Daily Timeframe

On the daily chart, we can see that the NZDUSDselloff from the 0.6389 resistance seems tobe unstoppable as the US data remains quite strong. The sellers will have tobreak the 0.6050 support to target the break of the 0.5987 level next. Thebuyers, on the other hand, will need the price to break above the trendline toswitch the bias from bearish to bullish and start targeting a rally towards the0.6389 resistance.

NZDUSD Technical Analysis –4 hour Timeframe

On the 4 hour chart, we can see that the price is diverging with theMACD rightwhen it’s approaching the 0.6050 support. This is generally a sign of weakeningmomentum often followed by pullbacks or reversals. In this case, we may see apullback all the way back to the downward trendline where the sellers will havean even better risk to reward setup to target the lows.

NZDUSD Technical Analysis –1 hour Timeframe

On the 1 hour chart, we can see moreclosely the support level and the divergence with the MACD. Aggressive buyersmay start to pile in here with a defined risk below the level and target thetrendline. The sellers, on the other hand, will want to see the price breakinglower to pile in even more aggressively and extend the selloff into the 0.5987low.

Upcoming Events

This week themain event will be the US CPI report on Thursday. The market is likely to focusmore on the Core readings as this is what the Fed is more interested in. Higherthan expected data should give the US Dollar a boost as the market’sexpectations will be skewed more on the hawkish side. On the other hand, lowerthan expected readings should weigh on the USD as it would support thesoft-landing narrative in the short-term. At the same time of the US CPI data,we will also see the latest US Jobless Claims report, which is less likely tomove the market since it’s released at the same time of the CPI, but bigsurprises should have an effect, nonetheless. Finally, we conclude the weekwith the University of Michigan Consumer Sentiment report on Friday where themarket is likely to focus more on the inflation expectations figures.

This article was written by FL Contributors at www.forexlive.com.

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