NZD/USD creating a bullish pattern going into the FOMC meeting
Although the cross traded to the lowest level in 39 months overnight, with the RBNZ monetary policy statement indicating that interest rates will remain at a restrictive level for some time, we have seen a strengthening in the NZD.
Later today we have the FOMC minutes. Looking at US10Y, it would indicate scope for a move to the downside in the correlated DXY (USD index)
This has resulted in the bias turning temporarily bullish NZD/USD.
From a technical perspective, we are building a cypher pattern known as a BAT formation. Currently, NZD/USD is moving lower within the BC leg. If the previous swing low of 0.5931 is not breached, the dip to the downside is regarded as temporary. A prime support level is located at 0.5944.
Conclusion: The fundamental outlook for the NZD is bullish. If we see a dovish stance from the FOMC minutes this evening, the negative USD bias should project NZD/USD higher through 0.5994 resistance. The BAT formation will complete at 0.6095.
Later today we have the FOMC minutes. Looking at US10Y, it would indicate scope for a move to the downside in the correlated DXY (USD index)
This has resulted in the bias turning temporarily bullish NZD/USD.
From a technical perspective, we are building a cypher pattern known as a BAT formation. Currently, NZD/USD is moving lower within the BC leg. If the previous swing low of 0.5931 is not breached, the dip to the downside is regarded as temporary. A prime support level is located at 0.5944.
Conclusion: The fundamental outlook for the NZD is bullish. If we see a dovish stance from the FOMC minutes this evening, the negative USD bias should project NZD/USD higher through 0.5994 resistance. The BAT formation will complete at 0.6095.