NZDUSD stays rangebound ahead of the RBNZ decision: traders expect no change to the OCR

FUNDAMENTAL
OVERVIEW

USD:

Last week, we got a hot US NFP report and slightly soft US CPI data. The market firmed up rate cut bets with
62 bps of easing seen by year-end. Overall, the data doesn’t really point in
that direction, but we will need to see more of it to confirm or deny the
market pricing.

Given the negligible
changes to the big picture after all the data, the US dollar remained mostly
rangebound with mixed performance against the major currencies. The future
outlook will still be guided by the evolution of the data.

This week, all the
important stuff will be released on Friday as we get the US Flash PMIs and the
Q4 GDP. We might also get the US Supreme Court decision on Trump’s tariffs.

NZD:

On the NZD side, the RBNZ is
widely expected to keep the OCR unchanged at 2.25% on Wednesday. At the last meeting, the
central bank’s projections implied a pause through 2026. The market disagrees
as it sees 37 bps of tightening by year-end. The data has been coming in better
and better, suggesting that the New Zealand economy turned a corner. Governor
Breman’s recent comments were neutral as she emphasised patience and full
optionality. The currency rallied so much mainly because of the US dollar weakness and the tight correlation with the Australian dollar.

NZDUSD TECHNICAL
ANALYSIS – DAILY TIMEFRAME

On the daily chart, we can
see that the NZDUSD has been consolidating near the highs after the strong rally
at the end of January. There’s not much we can glean from this timeframe, so we
need to zoom in to see some more details.

NZDUSD TECHNICAL
ANALYSIS – 4 HOUR TIMEFRAME

On the 4 hour chart, we can
see that we have a key swing point around the 0.5995 level defining the bullish
momentum on this timeframe. From a risk management perspective, the buyers will
have a better risk to reward setup around the 0.5995 level to position for a
rally into new cycle highs. The sellers, on the other hand, will look for a
break lower to pile in for a drop into the 0.5928 level next.

NZDUSD TECHNICAL
ANALYSIS – 1 HOUR TIMEFRAME

On the 1 hour chart, we can
see that we have a minor upward trendline defining the current consolidation.
The buyers will likely continue to lean on the trendline with a defined risk
below it to keep pushing into new highs, while the sellers will look for a
break lower to target the 0.5995 level. The red lines define the average daily range for today.

UPCOMING CATALYSTS

On Wednesday we have the RBNZ policy decision and the FOMC meeting
minutes. On Thursday, we get the latest US Jobless Claims figures. On Friday,
we conclude the week with the US Q4 GDP, the US PCE price index for December,
the US Flash PMIs and a potential US Supreme Court decision on Trump’s tariffs.