FundamentalOverview

The USD got a boost acrossthe board yesterday following the higher than expected US CPI report. The greenback couldn’t extend into newhighs though as the market was aware of the “January-effect” and thereforedidn’t put much weight on this particular release.

What weigh more on themarket were the positive headlines on the reciprocal tariffs as the White Houseadviser Hassett said that the reciprocal tariffs were a work inprogress and conversations with other countries began earlier that day,potentially implying negotiations.

Moreover, we got a verypositive post from Trump saying that he had a call withPutin and the tone of it was upbeat on a peace deal in the Russia-Ukraine war.He was even invited to Moscow. That helped the risk sentiment and weighed oncrude oil (less inflationary pressures).

On the NZD side, the New Zealand Q4 CPI report recently came in slightlybelow expectations while the Employmentreport showed another increase in the unemployment rate although it wasexpected. The market is pricing a 51% chance of a 50 bps cut at the upcomingmeeting and a total of 105 bps of easing by year end. After this 50 bps cut,the central bank will likely slow the pace of easing.

NZDUSDTechnical Analysis – Daily Timeframe

On the daily chart, we cansee that NZDUSD continues to range between the 0.55 handle and the 0.57 resistance.The price action has been very choppy, but it also looks like the pair is in abottoming out process as it weathered lots of negative catalysts. The market participantswill likely wait for a breakout on either side and then go with the flow.

NZDUSD TechnicalAnalysis – 4 hour Timeframe

On the 4 hour chart, we cansee that we have minor downward trendline defining the current pullbackfrom the resistance. The sellers will likely continue to lean on the trendlineto push into new lows, while the buyers will want to see a break higher to targeta move above the resistance.

NZDUSD TechnicalAnalysis – 1 hour Timeframe

On the 1 hour chart, we cansee that we have a support zone around the 0.5630 level even though we got aspike below it on the CPI release. The buyers will likely step in around thesupport to position for a rally into the resistance, while the sellers willlook for a break lower to increase the bearish bets into the 0.55 handle next. Thered lines define the average daily range for today.

UpcomingCatalysts

Today we get the US PPI, the latest USJobless Claims figures and the Trump’s reciprocal tariffs announcement.Tomorrow, we conclude the week with the US Retail Sales data.