Sample Category Title

The New Zealand dollar is sharply lower on Wednesday. NZD/USD is trading at 0.6081 in the European session, down 0.72% on the day at the time of writing.

RBNZ’s dovish tone raises rate cut expectations

The Reserve Bank of New Zealand held the cash rate at 5.50% at today’s meeting, the eight consecutive time it has maintained rates. No surprise there, but the rate statement was very dovish, which was completely unexpected.

At the previous RBNZ meeting in May, policy makers projected that the Bank would not lower interest rates until the third quarter of 2025. Today’s meeting appears to signal a significant shift away from that hawkish stance.

The heading of the policy statement was “Inflation Approaching Target Range”, in sharp contrast to the “Official Cash Rate to Remain Restrictive” in May. The statement noted that restrictive monetary policy had “significantly reduced consumer price inflation”, language which was more dovish than in the May statement. In the statement, the central bank acknowledged that policy would remain restrictive but added that this could change if, as expected, inflationary pressures eased.

The markets viewed the statement as a signal that the RBNZ might lower rates much sooner than expected, perhaps as early as the August meeting. This has triggered sharp losses for the New Zealand dollar as lower interest rates makes the New Zealand currency less attractive to investors.
The money markets have raised the possibility of an August rate cut to 60%, sharply higher than 33% prior to the rate decision. The inflation report for the second quarter, which will be released next Wednesday, will be a critical factor in the RBNZ rate decision in August.
.
NZD/USD Technical

• NZD/USD has pushed below support at 0.6114 and is testing support at 0.6079. Below, there is support at 0.6013
• 0.6180 and 0.6215 are the next lines of resistance

Daily Pivots: (S1) 1.0802; (P) 1.0824; (R1) 1.0845; More....

Intraday bias in EUR/USD remains neutral as consolidation continues below 1.0844. Further rally is in favor as long as 55 4H EMA (now at 1.0789) holds. On the upside, above 1.0844 will resume the rebound from 1.0665 to retest 1.0915 resistance. Firm break there will target 100% projection of 1.0601 to 1.0915 from 1.0665 at 1.0919 next. However, sustained break of 55 4H EMA will bring deeper fall back to 1.0665 support.

In the bigger picture, price actions from 1.1274 are viewed as a corrective pattern that's still in progress. Break of 1.0601 will target 1.0447 support and possibly below. On the upside, firm break of 1.0915 resistance will start another rising leg back to 1.1138 resistance instead.

Daily Pivots: (S1) 1.2768; (P) 1.2797; (R1) 1.2815; More...

Intraday bias in GBP/USD remains neutral as consolidation continues below 1.2845. Further rally is expected as long as 55 4H EMA (now at 1.2752) holds. Firm break of 1.2859 will resume the rally from 1.2298 and target 61.8% projection of 1.2298 to 1.2859 from 1.2612 at 1.2959. However, sustained break of 55 4H EMA will turn bias back to the downside for 1.2612 support instead.

In the bigger picture, price actions from 1.3141 medium term top are seen as a corrective pattern which might still extend. Break of 1.2612 support will bring another fall to 1.2298 support and possibly below. Nevertheless, break of 1.2892 resistance will argue that larger up trend from 1.0351 might be ready to resume through 1.3141.

Daily Pivots: (S1) 160.85; (P) 161.18; (R1) 161.63; More...

USD/JPY is still staying in range below 161.95 and intraday bias remains neutral. Further rally is expected with 160.25 minor support intact. On the upside, break of 161.94 will resume larger up trend to 61.8% projection of 146.47 to 160.20 from 154.53 at 163.01. Nevertheless, break of 160.25 will turn bias to the downside for deeper pullback.

In the bigger picture, long term up trend is still in progress. Further rise is expected as long as 154.53 support holds. Next target is 100% projection of 127.20 (2023 low) to 151.89 (2023 high) from 140.25 at 164.94.

Daily Pivots: (S1) 0.8965; (P) 0.8978; (R1) 0.8991; More…

USD/CHF is staying in range of 0.8942/9049 and intraday bias remains neutral. As noted before, rebound from 0.8825 could have completed at 0.9049, after rejection by falling channel resistance. Below 0.8942 will bring deeper fall to 0.8825 support. Nevertheless, break of 0.9049 will revive near term bullishness and resume the rebound from 0.8825 instead.

In the bigger picture, focus remains on 0.9223/9243 resistance zone. Decisive break there would suggest larger bullish trend reversal and turn outlook bullish. Nevertheless, rejection by 0.9223/43 will keep medium term outlook neutral at best, for more range trading between 0.8332/9243 first.

Yen continues its extended selloff today, except against New Zealand Dollar, in an otherwise subdued forex market. Reports indicate that BoJ may lower its economic growth forecasts for this year at its meeting later in July, while predicting that inflation will hover around 2% target in the coming years. These updated forecasts could keep the BoJ on track for another rate hike, potentially as soon as this meeting.

Additionally, BoJ's plan to taper its bond purchases is drawing attention. This week, the central bank is meeting with institutional investors to discuss its strategy. One of the megabanks has suggested significantly reducing monthly bond purchases to JPY 1T. However, opinions vary, with life insurance firms and asset managers offering diverging views—some advocating for gradual reductions, while others call for an immediate halt to purchases.

Despite these discussions, Yen is receiving little support and is likely to remain weak until BoJ's next meeting on July 30-31. Traders seem to be waiting for concrete actions rather than relying on speculative reports.

In the broader currency markets, New Zealand Dollar is the worst performer of the week so far, following today's sharp decline after RBNZ hinted at future monetary easing. This dovish shift has led markets to anticipate the first rate cut could occur in November, earlier than previously expected. Yen is the second weakest currency, followed by Swiss Franc.

On the flip side, Canadian Dollar is currently the strongest performer. Dollar is the second strongest but is on edge ahead of tomorrow's crucial US CPI release, which could significantly influence market movements. British Pound ranks third in performance, while Euro and Australian Dollar are trading in middle positions.

Technically, GBP/JPY's recent up trend is trying to resume today and momentum appears to be picking up slightly, as seen in 4H MACD. Near term outlook will stay bullish as long as 204.94 support holds. sustained break of 100% projection of 191.34 to 200.72 from 197.18 at 206.56 will target 138.2% projection at 210.17. The cross will be closely watching tomorrow's UK GDP release for further direction.

In Europe, at the time of writing, FTSE is up 0.61%. DAX is up 0.63%. CAC is up 0.64%. UK 10-year yield is down -0.0505 at 4.112. Germany 10-year yield is down -0.0586 at 2.528. Earlier in Asia, Nikkei rose 0.61%. Hong Kong HSI fell -0.29%. China Shanghai SSE fell -0.68%. Singapore Strait Times rose 0.99%. Japan 10-year JGB yield rose 0.0129 to 1.089.

RBNZ holds rates at 5.50%, softens hawkish tone

RBNZ left OCR unchanged at 5.50%, as widely expected. The central bank softened its hawkish stance in the accompanying statement, indicating that the extent of monetary restriction "will be tempered over time consistent with the expected decline in inflation pressures." Markets interpreted this as a signal that RBNZ is moving closer to lowering interest rates.

RBNZ also acknowledged that its restrictive monetary policy has "significantly reduced consumer price inflation," with headline inflation expected to return to the 1-3% target band "in the second half of this year." This decline in inflation reflects both receding domestic pricing pressures and lower inflation for imported goods and services. Additionally, labor market pressures have eased.

While domestically generated price pressures "remain strong," RBNZ said there are signs that "inflation persistence will ease in line with the fall in capacity pressures and business pricing intentions."

China's CPI slows to 0.2% in Jun, PPI negative for 21st month

China's CPI slowed to 0.2% yoy in June, down from 0.3% yoy in May, missing expectations of a 0.4% yoy increase. Core CPI, which excludes volatile food and energy prices, rose by 0.6% yoy, unchanged from May, but slightly slower than the 0.7% increase observed in the first half of the year.

On a month-on-month basis, inflation remained negative in June, with CPI falling by -0.2%, following a -0.1% decrease in May. This continued negative trend reflects ongoing deflationary pressures in the economy.

PPI fell by -0.8% yoy, improving from the prior month's -1.4% yoy decline and matching market expectations. Despite the slight improvement, PPI has remained negative for the 21st consecutive month, indicating persistent weakness in industrial prices.

USD/CHF Mid-Day Outlook

Daily Pivots: (S1) 0.8965; (P) 0.8978; (R1) 0.8991; More…

USD/CHF is staying in range of 0.8942/9049 and intraday bias remains neutral. As noted before, rebound from 0.8825 could have completed at 0.9049, after rejection by falling channel resistance. Below 0.8942 will bring deeper fall to 0.8825 support. Nevertheless, break of 0.9049 will revive near term bullishness and resume the rebound from 0.8825 instead.

In the bigger picture, focus remains on 0.9223/9243 resistance zone. Decisive break there would suggest larger bullish trend reversal and turn outlook bullish. Nevertheless, rejection by 0.9223/43 will keep medium term outlook neutral at best, for more range trading between 0.8332/9243 first.

Economic Indicators Update

NZDUSD was sharply lower during Wednesday morning (down almost 1% for the session) deflated by the Reserve Bank of New Zealand’s dovish stance.

The central bank left interest rates unchanged at 5.5%, as widely expected, but signaled that the door for possible rate cut remains open, should inflation continue to ease in line with expectations.

Fresh weakness broke through important technical supports at 0.6100 and 0.6089/80 (daily Tenkan-sen / daily Ichimoku cloud top /Fibo 38.2% of 0.5851/0.6221) and pressuring pivotal support at 0.6047 (July 2 higher low).

Daily close within a cloud to confirm bearish signal, with violation of 0.6047 trigger to complete a failure swing pattern on daily chart and open way for test of next targets at 0.6036/25 (50% retracement / daily cloud base), with break below thickening daily cloud to further weaken near-term structure.

Rising negative momentum on daily chart and daily Tenkan/Kijun-sen in bearish setup, add to negative near-term outlook.

Corrective upticks should be ideally capped by cloud top and not exceed daily Tenkan-sen, to keep bears intact and offer better selling opportunities.

Res: 0.6089; 0.6100; 0.6134; 0.6153.
Sup: 0.6047; 0.6036; 0.6025; 0.6000.

Market Picture

According to the sentiment index, the cryptocurrency market remains in a state of fear at 28. Still, market capitalisation rose for the second day in a row as lower prices attracted buyers. Capitalisation rose 1.9% to $2.16 trillion, surpassing previous local highs, which is promising.

Bitcoin gained 3.2% in 24 hours as it attempted to consolidate above the $59.0K level and the 200-day moving average. These levels are above the local highs, and we have seen the sell-off intensify over the past four days. The next milestones on the way up are seen at $60,000 and then $63,000. However, even after rising to $65.5K this month, bitcoin will remain within the descending channel.

Solana received impressive buyer support at the beginning of the week when it touched the 200-day moving average. This was an important signal that the balance of power was still with the bulls. However, it is too early for them to celebrate, as the crossing of the important curve is still small, and the 50-day average is pointing down and above the price—a bearish signal.

News Background

Demand for crypto instruments was seen against the backdrop of the German government’s maximum coin sales. On the 9th, the German government sent 6,306.9 BTC ($362.12 million) to trading platforms. Since mid-June, the country’s authorities have transferred over 26,200 BTC (~$1.5 billion) to exchanges and market makers. According to Arkham Intelligence, 27,460 BTC (~$1.57 billion) remain in reserve.

Market participants also expect the remaining distribution of 94,771 BTC (~$5.4bn) to Mt Gox customers.

Meanwhile, social media trader sentiment is the most bearish it has been in a year, according to Santiment data. With such a FUD crowd, the chances of a bounce catching most by surprise are at an all-time high.

Nate Geraci, president of The ETF Store, suggested that the SEC will approve the listing of spot Ethereum ETFs on 15 July. BlackRock, Fidelity, Grayscale, 21Shares, Franklin Templeton, and VanEck submitted updated Forms S-1 to the SEC the day before. Bloomberg analyst Eric Balchunas expects the ETH ETF to launch on 18 July.

• Gold trades higher, but withing a broader sideways range
• RSI and MACD imply strengthening upside momentum
• A break above 2388 could add to the bullish case
• A dip below 2340 may allow declines within the range

Gold is moving higher today, after hitting support near the 2,450 zone yesterday. The precious metal is trading above the short-term uptrend line drawn from the low of June 26, but in the bigger picture, it remains within the sideways range that’s been containing most of the price action since the beginning of April.

The RSI rebounded from near its 50 line, while the MACD, although still below its trigger line, shows signs of bottoming slightly above zero. Both indicators suggest that the precious metal is gaining upside momentum, increasing the chances for a test of the upper bound of the range 2,388 soon.

That said, the move that could solidify the supremacy of the bulls may be a decisive break above 2,388. A move above that obstacle could pave the way towards the high of May 22 at 2,426, or the peak of the day before at 2,434. If the bulls are not willing to stop there either, then they may try reaching the record high of 2,450.

On the downside, a dip below 2,340 could trigger decent declines within the aforementioned sideways range. The bears may initially aim for the 2,320 zone, the break of which could allow extensions towards the lower end of the range at 2,290.

To recap, gold is trending north in the very short-term, but in the bigger picture, it remains within a sideways range that’s been in play since April. For the outlook to brighten, a decisive break above the range’s upper bound of 2,388 may be needed.

Gold prices continue to experience an upward trend, reaching 2368 USD per troy ounce, fuelled by growing market anticipation of a potential rate cut by the US Federal Reserve. As investors focus on upcoming US inflation data, gold remains a focal point of investment interest.

In his recent testimony before Congress, Federal Reserve chair Jerome Powell highlighted June's improved yet uncertain economic indicators. He noted the need for more comprehensive data to solidify inflation forecasts and hinted at concerns over a slowing economy and a cooling job market. These developments are considered critical drivers for the speculated rate cut in September, currently perceived as likely by 73% of market analysts.

Additionally, increased investment flows into exchange-traded funds (ETFs) bolster gold's appeal, marking a second consecutive month of positive cash inflows. This investment trend underscores gold's role as a safe-haven asset amid financial market uncertainties.

Technical analysis of XAU/USD

Gold's trajectory on the H4 chart shows a potential movement towards the 2337.43 USD level. A rebound to 2365.20 USD could follow, testing this resistance from below. The market may then gear up for a further downward movement towards 2281.66 USD, potentially extending to 2175.00 USD. This bearish outlook is supported by the MACD indicator, which is currently at its peak and poised for a downward adjustment towards the zero level.

On the H1 chart, gold is consolidating around the 2365.20 USD mark. A downward break is anticipated, targeting 2337.43 USD as the immediate goal. Should this level be reached, a subsequent upward correction back to 2365.20 USD is likely. This scenario is validated by the Stochastic oscillator, which signals a potential decline from its current high position near 80, suggesting a near-term downward correction before further gains.

As the market navigates through these potential movements, investors remain vigilant, watching closely for any new economic data or policy shifts that could influence gold's price dynamics and the broader financial landscape.