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• New Zealand’s central bank takes a pause after 12 consecutive hikes
• New Zealand Manufacturing PMI expected to show manufacturing is stalled
• US inflation expected to decline to 3.1%

The New Zealand dollar showed some gains after the Reserve Bank of New Zealand paused rates, but has given up most of those gains. In the European session, NZD/USD is trading at 0.6206, up 0.14%.

RBNZ takes a breather

There was no dramatic surprise from the RBNZ, which kept interest rates on hold at Wednesday’s meeting, as expected. The central bank has been aggressive, raising rates 12 straight times since August 2021 until Wednesday’s meeting. This leaves the cash rate at 5.50%.

The RBNZ had signalled that it would take a break, with Deputy Governor Hawkesby stating last month that there would be a “high bar” for the RBNZ to continue raising rates. Today’s rate statement said that interest rates were constraining inflation “as anticipated and required”, adding that “the Committee is confident that with interest rates remaining at a restrictive level for some time, consumer price inflation will return to within its target range.” The RBNZ did not issue any updated forecasts or a press conference with Governor Orr, which might have resulted in some volatility from the New Zealand dollar.

The central bank has tightened rates by some 525 basis points, which has dampened the economy and chilled consumer spending. Is this current rate-tightening cycle done? The central bank would like to think so, but that will depend to a large extent on whether inflation continues to move lower toward the Bank’s inflation target of 1-3%.

The pause will provide policymakers with some time to monitor the direction of the economy and particularly inflation. If inflation proves to be more persistent than expected, there’s every reason to expect the aggressive RBNZ to deliver another rate hike later in the year.

New Zealand releases Manufacturing PMI for June on Wednesday after the rate decision. The manufacturing sector has contracted for three straight months, with readings below the 50.0 line, which separates contraction from expansion. The PMI is expected to rise from 48.9 to 49.8, which would point to almost no change in manufacturing activity.

The US will release the June inflation report later in the day. Headline inflation is expected to fall from 4.0% to 3.1%, but core CPI is expected to rise to 5.3%, up from 5.0%. If core CPI does accelerate, that could raise market expectations for a September rate hike. A rate increase is all but a given at the July 27th meeting, with the probability of a rate hike at 92%, according to the CME FedWatch tool.

NZD/USD Technical

• 0.6184 is a weak support level. Below, there is support at 0.6148
• 0.6260 and 0.6383 are the next resistance lines

Today’s US inflation data release is set to heavily influence the outlook on future Fed rate hikes. As things stand, a July hike is all but priced in, though Fed Funds futures expect just about a one-in-three chance of an additional hike for the rest of the year.

Markets are anticipating further evidence of softening inflationary pressures, with a slowdown in both the headline CPI as well as the core year-on-year prints, down to 3.1% and 5% respectively.

Should the CPI numbers come in below market expectations, that could cut the Fed some slack in this rate-hike cycle. Such a narrative may bolster risk assets, while heaping more downward pressure on the US dollar that’s wilting as markets doubt whether the FOMC’s two projected hikes will indeed materialise.

However, should US inflation remain stubbornly elevated, that should embolden the FOMC hawks while prompting markets to ramp up bets for that post-July rate hike. Such repricing should offer some relief for dollar bulls while prompting the likes of gold and oil to pare recent gains.

Daily Pivots: (S1) 180.88; (P) 181.44; (R1) 182.07; More...

Intraday bias in GBP/JPY remains on the downside as fall from 183.99 short term top is in progress for 179.90. Firm break there will target 55 D EMA (now at 176.39). On the upside, above 182.00 minor resistance will turn intraday bias neutral first.

In the bigger picture, as long as 172.11 resistance turned support holds, uptrend from 123.94 (2020 low) is expected to continue. On resumption, next target is 195.86 (2015 high). Nevertheless, firm break of 172.11 will argue that larger correction is already underway.

Daily Pivots: (S1) 153.90; (P) 154.79; (R1) 155.39; More....

EUR/JPY's fall from 157.99 is in progress and intraday bias remains on the downside. Sustained trading below 154.03 support will argue that it's at least correcting the whole rise from 139.05. Deeper fall would be seen to 55 D EMA (now at 152.28). On the upside, above 155.66 minor resistance will turn intraday bias neutral and bring consolidations first.

In the bigger picture, as long as 151.60 resistance turned support holds, rise from 114.42 (2020 low) is in progress. On resumption, next target is 100% projection of 124.37 to 148.38 from 138.81 at 162.82. Nevertheless, sustained break of 151.60 will argue that larger correction is already underway.

Daily Pivots: (S1) 0.8491; (P) 0.8526; (R1) 0.8548; More...

Intraday bias in EUR/GBP remains on the downside for the moment. Current decline from 0.8977 is in progress for 61.8% projection of 0.8874 to 0.8517 from 0.8650 at 0.8436. On the upside, above 0.8583 minor resistance will turn intraday bias neutral first. But near term outlook will remain bearish as long as 0.8657 resistance holds, in case of recovery.

In the bigger picture, the down trend from 0.9267 (2022 high) is still in progress. It's seen as part of the long term range pattern from 0.9499 (2020 high). Deeper fall could be seen towards 0.8201 (2022 low). But strong support should be seen from there to bring reversal. This will now remain the favored case as long as 0.8657 resistance holds.

Daily Pivots: (S1) 1.6436; (P) 1.6479; (R1) 1.6508; More...

Intraday bias in EUR/AUD remains neutral at this point. With 1.6247 support intact, further rally is expected. As noted before, correction from 1.6785 should have completed with three waves down to 1.5846. Above 1.6552 will target a retest on 1.6785 high next. Nevertheless, on the downside, firm break of 1.6247 will dampen this view and turn bias to the downside for 1.5846 support.

In the bigger picture, with 38.2% retracement of 1.4281 to 1.6785 at 1.5828 intact, rally from 1.4281 is still in progress. Firm break of 1.6785 will confirm rise resumption. Next target is 100% projection of 1.5254 to 1.6785 from 1.5846 at 1.7377. On the other hand, rejection by 1.6785 will extend the corrective pattern with another fall leg. But outlook will stay bullish as long as 1.5828 holds.

Daily Pivots: (S1) 0.9651; (P) 0.9708; (R1) 0.9740; More...

Intraday bias in EUR/CHF stays neutral this point. Firm break of 0.9670 support will resume the whole decline from 1.0095. Deep fall would be seen towards 0.9407 low. Nevertheless, on the upside, break of 0.9840 will argue that choppy decline from 1.0095 has completed, and bring stronger rally.

In the bigger picture, medium term outlook is staying bearish as the pair is capped below falling 55 W EMA (now at 0.9913). Down trend form 1.2004 (2018 high) is in favor to extend through 0.9407 at a later stage. Nevertheless, decisive break of 38.2% retracement of 1.1149 to 0.9407 will raise the chance of bullish trend reversal.

EUR/USD started a fresh increase above the 1.0975 resistance. USD/JPY is declining and showing bearish signs below the 141.20 level.

Important Takeaways for EUR/USD and USD/JPY Analysis Today

• The Euro is rising and trading well above the 1.1020 resistance zone.
• There is a key bullish trend line forming with support near 1.1020 on the hourly chart of EUR/USD at FXOpen.
• USD/JPY is trading in a bearish zone below the 141.20 and 140.20 levels.
• There is a major bearish trend line forming with resistance near 140.20 on the hourly chart at FXOpen.

EUR/USD Technical Analysis

On the hourly chart of EUR/USD at FXOpen, the pair started a fresh increase from the 1.0835 zone. The Euro climbed above the 1.0900 resistance zone against the US Dollar.

The pair even settled above the 1.0975 resistance and the 50-hour simple moving average. There was an upside break above the 76.4% Fib retracement level of the downside correction from the 1.1026 swing high to the 1.0977 low.

The pair is now consolidating gains below the 1.1040 resistance. The first major support is near a key bullish trend line at 1.1020.

The next key support is near the 50-hour simple moving average at 1.0995. If there is a downside break below 1.0995, the pair could drop toward the 1.0975 support. The main support on the EUR/USD chart is near 1.0900, below which the pair could start a major decline.

On the upside, the pair is now facing resistance near the 1.236 Fib extension level of the downside correction from the 1.1026 swing high to the 1.0977 low at 1.1040.

The next major resistance is near the 1.1065 level. An upside break above 1.1065 could set the pace for another increase. In the stated case, the pair might rise toward 1.1120.

USD/JPY Technical Analysis

On the hourly chart of USD/JPY at FXOpen, the pair started a strong decline well above the 143.50 zone. The US Dollar gained bearish momentum below the 142.15 support against the Japanese Yen.

The pair even settled below the 141.20 level and the 50-hour simple moving average. Finally, it broke the 140.00 pivot level. A low is formed near 139.38 and the pair is now showing a lot of bearish signs. Immediate resistance on the USD/JPY chart is near a bearish trend line at 140.20.

The 23.6% Fib retracement level of the downward move from the 143.00 swing high to the 139.38 low is also near 140.20. The first major resistance is near the 50-hour simple moving average at 141.20.

If there is a close above the 141.20 level and RSI moves above 50, the pair could rise toward the 76.4% Fib retracement level of the downward move from the 143.00 swing high to the 139.38 low at 142.15. The next major resistance is near 143.50, above which the pair could test 144.00 in the coming days.

On the downside, the first major support is near 139.35. The next major support is near the 139.00 level. If there is a close below 139.00, the pair could decline steadily. In the stated case, the pair might drop toward the 137.50 support.

The value of the largest cryptocurrency could reach USD 50,000 this year and USD 120,000 by the end of 2024, according to analysts at Standard Chartered, Reuters reports.

Note that earlier, bank analysts predicted that the cost of BTC at the end of 2024 would be USD 100,000, but now they have increased their forecast for the price of bitcoin by 20%, based on the assumption of a change in the behavior of miners that can limit the supply of bitcoins as its price rises.

Time will tell how true the bitcoin price forecast for 2024 from Standard Chartered will be, but on the BTC/USD chart today there is an argument in favor of the fact that the forecast can be realized. This is the nature of price action around the USD 30k psychological level.

Compare 2 periods when the price of bitcoin exceeded USD 30k.

In April, the price met strong resistance only USD 500 higher, and a week after the breakdown of USD 30k, it rushed down.

And now is the second period, which began on June 21 and continues to last. The level of immediate resistance above the psychological level is already higher — at around 31k, and the price of bitcoin has not fallen (except for short-term punctures) below USD 30k for almost 3 weeks.

The comparison shows that the bulls are getting more of an edge at the USD 30k level, in other words, the market is shifting in favor of demand forces. And this is optimistic for Standard Chartered's USD 120k bitcoin price prediction.

Stock markets are tentatively higher on Wednesday as traders adopt a cautious position ahead of the US inflation report.

Any hopes of another pause from the Fed this month have dwindled in recent weeks as the data simply hasn't delivered what it needed to in order to convince the FOMC to do so for a second consecutive meeting. A second pause would be taken as a sign that the tightening cycle is over so it's not a decision that would be taken lightly.

The jobs report on Friday was nowhere near good enough to convince the Fed that it has achieved its objectives. There will no doubt have been relief that the NFP number didn't replicate that of the ADP but together with the wage component, it still pointed to a labour market that is very tight.

It would take something remarkable from the inflation report today to convince policymakers that they can afford to pause again. The headline CPI falling to 3.1% doesn't fall into that category when the core number is expected to remain high at 5%. It would take a real shock on the core side to really stimulate the debate in two weeks.

RBNZ may be done with its tightening cycle

The RBNZ opted to pause its tightening cycle earlier today after a very aggressive tightening cycle over the last couple of years. After increasing the cash rate to 5.5%, there are signs that the economy is slowing which will bring inflation down. While inflation has only fallen to 6.7% so far, data next week is expected to show it falling further and the central bank is confident it will return to its 1-3% target range next year.

New Zealand faced many challenges in the aftermath of the pandemic which contributed to surging inflation but much higher rates and levels of immigration appear to be easing those pressures.

Could US CPI trigger a major breakout in Gold?

Gold is edging higher again today but there is clearly an element of caution in the move. Perhaps traders are hopeful of a favourable CPI figure from the US but they're clearly not that confident with the price remaining below $1,940 where it has repeatedly run into resistance.

A break above here today could be a bullish signal, although there remain many more obstacles ahead including $1,960, $1,980 and $2,000 before traders will feel confident that the yellow metal is back. A stronger inflation report could push it back towards $1,900 which has held as support until now, mostly. A break of this could be a very bearish development.