The USD lost ground last week due to a soft US CPI report, leading to market expectations of two rate cuts by the end of the year. However, the market reversed its moves after a more hawkish FOMC decision that projected only one cut for the year. Despite this, Fed Chair Powell remained cautious and data-dependent. The rally in the US Dollar gained momentum as risk sentiment turned cautious, putting pressure on the NZD.
The NZDUSD pair spiked to the key resistance level of 0.6217 following the US CPI report, but then dropped after the FOMC decision. The pair now has strong support at 0.6082, where buyers are expected to step in with a defined risk below the support level to position for a rally. Sellers, on the other hand, will look for a break below this support to increase bearish bets towards the 0.60 level.
On the 4-hour chart, the NZDUSD pair has been trading within a range between the 0.6082 support and 0.6217 resistance. Breaking these levels will be crucial for a sustained trend. The market may continue to fluctuate until new catalysts emerge.
Looking at the 1-hour chart, sellers have a resistance zone around 0.6142, where the trendline and 38.2% Fibonacci retracement level converge. Buyers will aim for a break above the 0.6217 resistance to gain conviction. Tomorrow, the US Retail Sales and Industrial Production data will be released, followed by New Zealand GDP and US Housing Starts, Building Permits, and Jobless Claims on Thursday. The week will conclude with US PMI data on Friday.