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Federal Reserve Chairman Jerome Powell will hold a monetary policy press conference in ten minutes.On March 19th, amid widespread market expectations of interest rate cuts by the Federal Reserve this year and next, one Fed policymaker predicted a rate hike next year. This prediction represents a minority view: most Fed policymakers still believe in rate cuts this year, consistent with their view in December. However, with the Iran war and its resulting surge in oil prices continuing into its third week, the sole prediction of a rate hike next year suggests a potential debate about whether its possible to combat inflation that has exceeded target levels over the past five years without changing interest rates. Furthermore, there are increasing signs that the Fed is trending towards a more hawkish policy stance. Even the most dovish policymaker (Milan) expects a 100 basis point rate cut this year, compared to his December forecast of 150 basis points. For this year, 7 of the Feds 19 policymakers believe interest rates will remain unchanged by the end of the year, 7 believe a 0.25 percentage point rate cut is needed, and 5 believe at least two rate cuts are necessary.The charts in the Federal Reserves economic projections show that most FOMC participants believe that PCE inflation and core PCE inflation face high uncertainty, with risks tilted to the upside.The chart in the Federal Reserves economic projections shows that most FOMC participants believe there is high uncertainty surrounding the unemployment rate and that the risks are tilted to the upside.March 19th - The Federal Reserves March monetary policy statement was largely unchanged from its January statement. The statement now notes that the unemployment rate is "virtually unchanged," whereas in January the Fed stated that the unemployment rate "had shown some signs of stabilization." The Fed statement added a new sentence: acknowledging the situation in the Middle East conflict, but stating only that its impact on the economy is "uncertain."

Analysis of the NZD/USD Price indicates a continuation of gains towards 0.65

Daniel Rogers

Jan 18, 2023 15:02

 NZD:USD.png

 

The NZD/USD pair is oscillating within a narrow range near 0.6430 in the early Asian session. Despite the market's risk aversion, the New Zealand dollar has traded sideways after reclaiming the monthly high of 0.6437. In reaction to Tom Barkin's hawkish comments about the Richmond Federal Reserve (Fed) Bank, S&P500 futures are exhibiting greater losses, indicating investors' diminishing appetite for risk.

 

Following a V-shaped recovery, the US Dollar Index (DXY) has turned sideways at 102,000 and is expected to extend gains on a risk aversion theme. In addition, higher 10-year US Treasury yields would certainly provide safe-haven investments a new lease of life.

 

After one hour of consolidation, the NZD/USD pair has broken out of the Bullish Pennant chart pattern, indicating that the rising trend will continue. Participants typically initiate long positions during the consolidation period of a chart pattern, preferring to enter an auction once a bullish bias has been established.

 

Adding to the upward filters, the 20-period and 50-period Exponential Moving Averages (EMAs) have resumed their upward trend at 0.6415 and 0.6401, respectively.

 

Meanwhile, the Relative Strength Index (14) continues to struggle to enter the positive zone between 60.00 and 80.00. The occurrence of a similar event will produce bullish momentum.

 

For greater gains, the Kiwi asset must beat Tuesday's high of 0.6439, which will rocket it to December 15's high of 0.6470, then December 13's high of 0.6514.

 

Alternately, a breach below Monday's low of 0.6361 will weaken the New Zealand Dollar and push the Kiwi asset towards January 12's low of 0.6304. A breach below this level will expose the asset to more losses approaching the low of 0.6263 on December 28.

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