NZD/USD Runs a Solid Week, But Faces Headwinds Ahead of Key Levels
NZD/USD – H4
The pair doubles down on last week's gains, having started the current one on the offensive, but had rejected key technical levels yesterday and faces difficulties today.
NZD/USD may struggle for direction ahead of today's US CPI Inflation (13:30 GMT), which have the ability to create volatility and determine the next leg of the move. In December, Headline CPI had surged 7% - the highest since 1982.
On the central bank front, the US Federal Reserve is widely expected to hike rates in March, but the question seems to be whether it will be a 25 or 50 basis move. Fed Cleveland President Loretta Mester, who is a voter, does not see a compelling case for the latter, based on yesterday's comments as reported by Reuters. [1]
The Reserve Bank of New Zealand is far ahead in monetary policy tightening than its US counterpart, since it has already stopped its QE and has increased interest rates two times (at 0.75%), with the next decision due on Wednesday February 23.
The Kiwi shows indecision today, but remains close to key 0.6700-15, where the EMA200 and the 50% Fibonacci of the last leg down coincide. A break above can open the door for a rise beyond mid-0.6700s, but 0.6805-17 has a high degree of difficulty at this stage.
On the other hand, its recent recovery seems overextended and the pair is vulnerable, as long as it does not clear 0.6700-15. As such, there is risk of a breach of the ascending trend-line from January's 2022 lows (at around 0.6640), while a catalyst will likely be required for a larger drop towards and below 0.6588.
Nikos Tzabouras
Senior Market Specialist
Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.
With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.
References
| Retrieved 07 Jun 2023 https://www.reuters.com/world/us/feds-mester-says-she-doesnt-see-compelling-case-start-with-50-bps-rate-hike-2022-02-09/ |
Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this website are provided on an "as-is" basis, as general market commentary and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, FXCM takes all sufficient steps to eliminate or prevent any conflicts of interests arising out of the production and dissemination of this communication. The employees of FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the FXCM's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed here.