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NZD: Market Breakdown Ahead of GDP Release

The NZDUSD pair rose nearly a quarter of a percent to the 0.6110s after the US Dollar weakened following disappointing US Retail Sales data for April and May. The lower-than-expected retail sales growth in May and downward revisions for April indicate a slowdown in US consumer spending, leading to revised market expectations of future US interest rate cuts. The probability of the Federal Reserve cutting rates by 0.25% in September increased from 55% to 60%, with a 68% chance of a total 0.25%-0.50% cut by then. Meanwhile, the New Zealand Dollar remains broadly weaker due to a slump in the country’s services sector and consecutive quarters of negative GDP growth, suggesting a recession and increasing the likelihood of a rate cut by the Reserve Bank of New Zealand in November. Despite recent Fed officials’ hawkish comments, the NZD’s performance is weighed down by domestic economic challenges and rate cut expectations.

EURNZD – D1 Timeframe

The rectangular zone on the daily timeframe chart of EURNZD above depicts a drop-base-rally demand zone that was formed right after a sweep of liquidity from the previous low; making it a pretty strong area of price action to consider. Also, the zone fits into the 88% region of the Fibonacci retracement tool, thus confirming my bullish sentiment.

Analyst’s Expectations:

  • Direction: Bullish
  • Target: 1.78904
  • Invalidation: 1.71636

GBPNZD – H4 Timeframe

GBPNZD on the 4-hour timeframe presents a clean argument in favor of the bearish sentiment. Here, we see price trade into a supply zone that is nested on top of the 200-day moving average and get rejected immediately after. This gives an indication that the current move could play out as a bearish impulse; hence, my sentiment on GBPNZD is bearish.

Analyst’s Expectations:

  • Direction: Bearish
  • Target: 2.05870
  • Invalidation: 2.08167

NZDUSD – H3 Timeframe

NZDUSD on the 3-hour timeframe has just bounced off the drop-base-rally demand zone. The trendline support provides an additional confluence as it overlaps the demand zone. The final piece that brings it all together is the MACD indicator’s signal of a bullish onset as seen on the indicator window of the attached chart. These factors point me clearly in favor of a bullish move for NZDUSD.

Analyst’s Expectations:

  • Direction: Bullish
  • Target: 0.60430
  • Invalidation: 0.61565

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