Fundamental overview
The increase in the USD laid down last week when the US government closed many key American economic reports. The “rethink trade” of the dollar needs solid American data to continue, especially on the side of the labor market, so that any hiccups on this front is likely to continue to weigh on the greenback. The market price is now back at 45 bps of softening at the end of the year and 110 bps by the end of 2026. This could still be too dominant, but we will need solid data to reproduce.
In the absence of government data, a drop in rate in October is now considered an agreement. The reality is that a October Cup has never really been in question. This is the December Cup which could be assessed in case the data is strengthened. We still have three NFPs and two CPI reports before the December meeting.
The greenback has erased all the gains triggered by the data from last week in the meantime, because we are probably experiencing a decline after a very strong rally. The other possible reasons include fears of government closure and quarter -end flows.
On the NZD side, the RBNZ should reduce by 50 BPS tomorrow (probability of 55%) and bring the OCR to 2.5%, which is the lower limit of their estimated neutral beach (2.5%to 3.5%). The New Zealand dollar has weakened strongly following a contraction of 0.9% in the GDG-Q2 report which was much greater than the projection of -0.3% of the RBNZ.
Since the central bank focuses on the catering capacity as a reason to cut more aggressively, the traders increased bets for a cut of 50 bps. The market assesses 61 BPS of softening at the end of the year and 77 bps cumulatively by the end of 2026. Whether the RBNZ cuts 25 or 50 BPS, it will keep a softening bias and will focus on the next quarterly report of the IPC.
NZDUSD technical analysis – Daily delay time
NZDUSD Daily
On the daily graphic, we can see that the NZDUSD retired to the 0.5850 key resistance zone. The sellers will probably continue to intervene in the resistance with a risk defined above it to position for a drop in new hollows. Buyers, on the other hand, will look for a higher break to build for a gathering in the major trend line around the level of 0.5950.
NZDUSD technical analysis – 4 hours
Nzdusd 4 hours
On the 4 -hour table, we can see that we have a minor support area around the handle of 0.58. This is where we can expect the buyers to intervene with a risk defined below the support to position a break above the resistance of the keys. The sellers, on the other hand, will want to see the price drop to increase the betting bets at new.
NZDUSD technical analysis – 1 hour time
Nzdusd 1 hour
On the one hour graphic, there is not much other than we can add here because the pair has remained stuck in a fork with traders waiting for new catalysts. We can see, however, that the price is now both in the support area and the lower limit of the average daily beach for today (red line). This should technically limit the disadvantage for today and give buyers a conviction to worse around these levels in the RBNZ decision.
Upcoming catalysts
Tomorrow we have the announcement of RBNZ policy. On Thursday, we fed President Powell Speaking and American unemployment claims (if the closure is lifted). Friday, we conclude the week with the report on feelings of consumers of the University of Michigan.
