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If the Federal Reserve remains on hold regarding its interest rates, but suggests they may hike borrowing costs next month this could send the NZD/USD lower.
The NZD/USD is trading near the 0.59370 ratio as of this writing, which is an improvement on Monday’s low but was still below the 0.59000 mark. The past handful of days have produced some slight buying in the NZD/USD as financial institutions may believe the currency pair has been oversold and has room to wander upwards. However, the U.S. Federal Reserve is ready to announce later today its FOMC Statement and interest rate decision.
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The next few hours of trading in the NZD/USD may remain cautious as financial institutions brace for the trouble ahead later today which will certainly unfold. Any signs of polite trading now in the NZD/USD will vanish as the key FOMC Statement approaches, and the price range of the currency pair will turn rather chaotic. The Federal Reserve is not expected to raise interest rates today, but they are expected to sound rather hawkish and suggest another Federal Funds Rate hike might take place soon.
Having climbed back over the 0.59000 level and trading within sight of short-term highs presently is encouraging for NZD/USD bullish speculators. However no traders should get too comfortable today, solid risk management including taking profit and stop loss orders should be practiced. Traders who do not have deep pockets may want to watch from the sidelines as the Federal Reserve speaks to the marketplace because the NZD/USD value will get quite choppy.
If the Federal Reserve remains on hold regarding its interest rates, but suggests they may hike borrowing costs next month this could send the NZD/USD lower. However, tricky business is guaranteed to ensue in the trading world today, because large institutions have already likely braced for this ‘pause but aggressive stance’ already. This means that the NZD/USD could react with what seems a counter-intuitive move after the FOMC Statement, and suddenly see the currency pair begin to escalate.
- Traders need to understand today’s Fed announcement will cause potential whipsaw conditions as financial institutions react later today.
- If the NZD/USD climbs, traders should not get overly ambitious and try to cash out winnings if they materialize, because if the currency pair becomes volatile changes in value could develop quickly.
Current Resistance: 0.59490
Current Support: 0.59325
High Target: 0.59875
Low Target: 0.58610
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