This week, the Fed took a slightly more hawkish approach than
expected by keeping interest rates steady at 5.00-5.25 but raising the
projected terminal rate in the Dot Plot by 50 basis points. The Fed decided to
pause and collect more economic data before making a decision about a possible
interest rate hike in July. This cautious approach may be justified by the
weaker details found in the latest NFP report, the ISM Services PMI report, and the CPI report, although the core readings remain at elevated
levels.

Fed Chair Powell said that
a hike at the July meeting is an active consideration, but he refrained from
making any firm commitments. When the Dot Plot was released, the market quickly
bid the US Dollar, but the value returned to its original levels once Powell’s
press conference started. Overall, this indicates that the Federal Reserve is
prepared to take further action to reduce inflation, but their decisions will
depend on the economic data. Yesterday, the number of US Jobless Claims once again missed forecasts by a
big margin, which may indicate a weakening labour market.

NZDUSD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that once the NZDUSD
broke out of the trendline, the
pair rallied strongly to the 0.6247 high. The sellers don’t have any strong resistance level to
lean onto now while the buyers can start targeting the 0.6389 level. The moving averages have
crossed to the upside which should be a signal for more upside incoming. The
price has also overstretched a bit as we can see by the distance from the blue
8 moving average. In such instances, we can generally see some consolidation or
a pullback into the moving average before the next move.

NZDUSD Technical Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that the red 21
moving average has been acting as dynamic support for the buyers and we can
expected it to keep doing so in case we get the pullback. In fact, from a risk
management perspective, the buyers should wait for the price to pull back into
the 0.6182 support where they will encounter the 21 moving average and also the
daily 8 moving average for further confluence. The
sellers, on the other hand, will want to see the price breaking below the
support zone to pile in and target the 0.6084 level.

NZDUSD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that the
price is struggling a bit at the 0.6240 high as we head into the weekend. As
mentioned earlier, the buyers would be better off to wait for the price to
pullback into the 0.6182 support, while the sellers should wait for the price
to break below the support zone before piling in for shorts. Eventually, it
will depend on the data going forward.

Today, the market
will pay special attention to the University of Michigan consumer sentiment
report. Last time, the market reacted strongly to this report because long-term
expectations for inflation showed a significant increase, going up from 3.0% to
3.2%. However, the number was later adjusted to 3.1%. So, if we see another
rise in long-term inflation expectations, it’s likely that the value of the
dollar will go up. On the other hand, if the data doesn’t meet the forecasts,
we can expect the dollar to depreciate.

This article was written by FL Contributors at www.forexlive.com.

• Core inflation holding around 5% could require rate hike in September, possibly beyond
• Not yet seeing beginning of slowdown in core inflation

That’s a better take as he even goes as far as to attach a figure for what may be a trigger. It’s all down to the data now to confirm if there will be any further rate hikes beyond the summer for the ECB then.

This article was written by Justin Low at www.forexlive.com.

It has been a storming run for AUD/USD ever since testing the 0.6500 mark as buyers have certainly not relented in the rebound to its highest levels since February this week. Here’s a look at the daily chart:

The pair is down 0.2% to 0.6869 at the moment but it isn’t really hurting the technical breakout this week. Buyers have managed to do a lot since the break above the 100 (red line) and 200-day (blue line) moving averages, maintaining the more bullish bias since.

The following break of the April and May highs near 0.6800 has also been key in trading yesterday, reaffirming a stronger bias for further upside momentum.

As things stand, there is little resistance before getting the 0.7000 so that could keep buyers incentivised in chasing a push higher. A hot Australian jobs report this week is also bolstering odds for a RBA rate hike in July and if equities continue their good form, a more positive risk mood should also help the pair stay buoyed in the sessions ahead.

This article was written by Justin Low at www.forexlive.com.

• Policy is on restrictive terrain, it isn’t a support to growth
• Rates should remain in restrictive territory for some more time after the summer

Again, they’re just alluding to rates staying high beyond the summer but falling short of actually confirming a rate hike in September. The door is open though and that seems to be all markets need to be convinced, at least for now.

This article was written by Justin Low at www.forexlive.com.

From a technical standpoint, this is one of the more attractive dollar charts at the moment in my view. The pair had largely been consolidating around 1.3300 to 1.3900 since the end of last year, and finally we might be seeing a break in that range.

The drop this week takes out the key trendline support (white line) and more importantly, the weekly close now may be set for a break below the November low of 1.3225. That will be a massive win for sellers if they can hold steadfast in their conviction.

Just going by the chart, it should lend to a break below 1.3200 and there is very little support standing in the way of a further run lower in USD/CAD.

The 100 and 200-week moving averages are seen at 1.3037-69 currently and they may be what offers buyers some reprieve before testing the 1.3000 mark itself. That does afford sellers with some room to roam in the meantime but the risk for those staying long in the loonie is that of oil prices I would say.

Even though equities have been enjoying a good run of form, oil has not been able to find much comfort ever since the Saudi surprise earlier this month. That could help to prevent a slide in USD/CAD but if equities continue to stay firm while the dollar flounders, the technical picture is certainly making a case for a further drop in the pair.

This article was written by Justin Low at www.forexlive.com.