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NZD/USD - Support at 0.8450-0.84; FOMC Decision

The NZD/USD has been falling sharply establishing a high on the year at 0.8835. The decline has broken below the 2014-rising trendline and pushed the daily RSI below 30. These are signs that the market is no longer bullish, and could be bearish in the short-term. 

NZD/USD Daily Chart 7/29

Whether this bearish outlook will extend into the medium term could depend on the pairs reaction after tomorrow's FOMC decision, and whether NZD/USD will hold above the 0.84-0.8450 area.

This 0.84-0.8450 area contains 
1) the 200-day SMA
2) A rising trendline connecting the August 2013 low of 0.7713 with the 2014-low at 0.8051, made in February.
3) Previous resistance area for the consolidation period between Nov. 2013 and Feb. 2014.

With the RSI below 30, the FOMC statement might need to be hawkish to push NZD/USD below 0.84 without a significant correction. For example, if the FOMC speeds up tapering. It has been cutting bond purchases by $10B/month and the total was $25B/month after the previous meeting. The statement would be hawkish if it suggests that the Fed is considering a rate hike before mid-2015. 

Without a hawkish FOMC, we might see some bullish correction from the 0.84-0.8450 area. However we should limit the upside. Expect sellers in the 0.86-0.8650 area.