- The New Zealand dollar shows sharp, chaotic movement following the FOMC decision, with traders reacting more to Jerome Powell’s remarks than the rate announcement itself.
- Price now sits at a key inflection zone, with a major breakout or rollover likely.
The New Zealand dollar has been all over the place during the trading session on Wednesday as the FOMC interest rate decision and press conference have come and gone. This is another scenario where markets just don't know what to do with the information. And I would suggest that it's mainly the press conference after the interest rate decision that has thrown so much chaos into this pair.
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The US dollar has weakened a bit, but we are pressing a major resistance barrier. And at this point in time, I think if we can break above the 200-day EMA, which is the 0.5830 level, then it will remove most of the doubt for the New Zealand dollar. On the other hand, if we turn around and show signs of exhaustion, then I think you have a situation where we could really start to see the market roll over.
Major Inflection Point
I think at this point in time, confusion is probably the best word I can use for the nonsense that I see on the short-term charts, recognizing that we are at a major point of inflection. The 0.58 level itself is very important, and it should be paid close attention to. And with that being the case, I think we are about to make a big move. The question will be settled over the next couple of days, but it is worth noting that at least so far it looks like the US dollar is on its back foot.
I believe that market participants expect more Federal Reserve rate cuts, but to be honest, listening to the press conference, it doesn't sound like it's exactly a slam dunk at this point. Expect more choppy volatility as Jerome Powell has proven again that he cannot handle press conferences and the idea of being clear with his ideas.
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