As the week unfolds, economic data and central bank decisions will continue to shape market sentiment, influencing key currency pairs and broader financial trends. The NZDUSD pair's technical outlook suggests a potential continuation of its upward momentum, while fundamental factors, including the RBNZ's rate cuts and inflation dynamics, add further complexity to the landscape. With volatility expected to persist, traders should remain adaptable, closely monitoring price action and macroeconomic developments for emerging opportunities.
Overview
As the week unfolds, economic data and central bank decisions will continue to shape market sentiment, influencing key currency pairs and broader financial trends. The NZDUSD pair's technical outlook suggests a potential continuation of its upward momentum, while fundamental factors, including the RBNZ's rate cuts and inflation dynamics, add further complexity to the landscape. With volatility expected to persist, traders should remain adaptable, closely monitoring price action and macroeconomic developments for emerging opportunities.
Key Economic Events
Wednesday 03:00 am (GMT+2) - New Zealand: Official Cash Rate (NZD)
Wednesday 09:00 am (GMT+2) - UK: CPI y/y (GBP)
Thursday 02:30 am (GMT+2) - Australia: Employment Change (AUD)
Thursday 15:30 (GMT+2) - USA: Unemployment Claims (USD)
Friday 09:00 am (GMT+2) - UK: Retail Sales m/m (GBP)
Friday 10:15 am (GMT+2) - France: Flash Manufacturing PMI (EUR)
Friday 10:15 am (GMT+2) - France: Flash Services PMI (EUR)
Friday 10:30 am (GMT+2) - Germany: Flash Manufacturing PMI (EUR)
Friday 10:30 am (GMT+2) - Germany: Flash Services PMI (EUR)
Friday 11:30 am (GMT+2) - UK: Flash Manufacturing PMI (GBP)
Friday 11:30 am (GMT+2) - UK: Flash Services PMI (GBP)
Friday 15:30 (GMT+2) - Canada: Retail Sales m/m (CAD)
Friday 16:45 (GMT+2) - USA: Flash Manufacturing PMI (USD)
Friday 16:45 (GMT+2) - USA: Flash Services PMI (USD)
Technical Analysis
The NZDUSD pair has staged a notable recovery following a sustained downtrend that began on September 30, finding firm support at 0.55147 and signaling a shift in market sentiment. The formation of a Hammer candlestick highlighted a waning bearish presence, while a subsequent failure swing pattern confirmed a structural transition to the upside. The trough at 0.55990 held above the prior level, and price action decisively broke above the previous peak at 0.57008, reinforcing bullish momentum.
Technically, the pair has exhibited further strength by breaking above both the 20-period and 50-period Simple Moving Averages (SMA), forming a Golden Cross—a classic bullish reversal pattern that suggests a sustained move higher.
Momentum indicators further validate this outlook. The Momentum Oscillator has moved above the 100 threshold, while the Relative Strength Index (RSI) remains above 50, both signaling continued upside pressure. These factors collectively support a broader bullish bias, with the potential for further gains if price action sustains above key support levels.
Potential Upside Targets
If buyers maintain control of the market, traders may shift their focus to the following four potential resistance levels:
0.57485: The first level of resistance is determined at 0.57485, which reflects the daily high marked February 17.
0.58260: The second resistance level is observed at 0.58260, which aligns with the weekly resistance, R2, estimated using the standard Pivot Points methodology.
0.58655: The third price objective is projected at 0.58655, representing the 261.8% Fibonacci Extension drawn from the high point, 0.57008, to the low point, 0.55990.
0.60302: An additional price objective is projected at 0.60302, representing the 423.6% Fibonacci Extension drawn from the high point, 0.57008, to the low point, 0.55990.
Potential Downside Targets
If sellers take control of the market, traders may focus on the following four key support levels:
0.57008: The initial support level is estimated at 0.57008, representing the swing high marked February 5.
0.55990: The second support level is determined at 0.55990, aligning with the swing low from February 12.
0.55508: The third downside target is observed at 0.55508, corresponding to the weekly support, S2, calculated using the standard Pivot Points methodology.
0.55147: An additional downside target is noted at 0.55147, reflecting the daily low marked February 3.
Fundamentals
New Zealand's central bank cut its benchmark interest rate by 50 basis points to 3.75%, marking its fourth consecutive reduction as it seeks to stimulate a slowing economy. The move aligns with expectations and brings the policy rate to its lowest level since November 2022. With inflation stabilizing near the mid-point of its 1%-3% target, the RBNZ sees room for further easing, projecting additional cuts if economic conditions evolve as expected. While lower rates aim to boost spending, global uncertainty, a weaker currency, and higher fuel costs may add volatility to inflation. The central bank expects gradual economic recovery in 2025, with long-term policy rates potentially falling to 2.25%.
Conclusion
This week's economic calendar is packed with key data releases and central bank decisions that could drive market volatility. Investors will closely monitor interest rate policies, inflation trends, and employment figures for insight into the broader economic landscape. Meanwhile, technical and fundamental factors continue to shape NZDUSD price action, with traders watching key support and resistance levels for confirmation of sustained momentum. As markets react to these developments, strategic positioning remains essential in navigating potential opportunities and risks.