If you’re gutsy enough to trade the FOMC decision, here’s a neat dollar consolidation setup you might wanna watch closely.
And don’t forget that New Zealand has a major catalyst coming up, too!
Which way will NZD/USD go?
Before moving on, ICYMI, today’s Daily Asia-London Session Watchlist looked at an opportunity forming on CAD/JPY as it consolidates, so be sure to check that out to see if there is still a potential play!
Fresh Market Headlines & Economic Data:
- Asian shares retreat in quiet ranges ahead of FOMC decision
- RBA policymaker Kent expects more business failures as fiscal support fades, negative rates not a consideration
- Int’l Atomic Energy Agency warns that Iran is closer to developing a nuclear weapon
- Queensland state reports more adverse reactions to AstraZeneca vaccine
- New Zealand GDT auction yielded 3.8% drop in dairy prices
- Japanese trade deficit at 0.04T JPY vs. 0.10T JPY consensus, exports to China and U.S. decline
Upcoming Potential Catalysts on the Economic Calendar:
- Canadian CPI and inflation figures at 12:30 pm GMT
- EIA crude oil inventories at 2:30 pm GMT
- FOMC statement and projections at 6:00 pm GMT
- FOMC press conference at 6:30 pm GMT
- New Zealand GDP at 9:45 pm GMT
What to Watch: NZD/USD
This pair might be in for fast-paced moves in the next trading sessions. If you have the stomach for higher volatility, then this potential breakout might be worth catching!
NZD/USD has formed lower highs and higher lows inside a symmetrical triangle on the hourly time frame, and price looks ready to bust out.Will buyers or sellers take control?
The upcoming FOMC decision would likely be the deciding factor, as any shift in policy tone could impact dollar direction. Policymakers are widely expected to address the surge in bond yields, but many think that Fed head Powell will just stick to his guns and assure that no adjustments are needed for now.
If that’s the case, dollar bulls might be disappointed and dump the U.S. currency, possibly leading to an upside breakout for NZD/USD. The 100 SMA is above the 200 SMA after all, hinting that bulls have the upper hand.
At the same time, Stochastic is inching close to the oversold region to signal exhaustion among sellers and a possible pickup in bullish pressure.Any indication that the Fed is considering tightening policy, whether by creative means like Operation Twist or using other tools in their arsenal, might mean gains for the scrilla and a downside break for this pair.
If you’re planning on waiting for the dust to settle after this top-tier event, you might still have a shot at catching big moves by the time New Zealand releases its Q4 2020 GDP reading.
A smaller growth figure of 0.2% is eyed, but an upside surprise might also spur strong gains for the Kiwi.
