- US Dollar Index refreshes weekly high at 93.92 on Powell headlines.
- The NZD/USD pair is headed for its second straight daily close in the negative territory.
- Markets await the announcements from the FOMC.
The NZD/USD pair advanced to a daily high near 0.7050 in the first half of the day but failed to preserve its daily gains as the greenback recovered toward the 94 mark during the American trading hours. As of writing, the pair was trading at 0.7005, losing 0.25% on the day.
Although today’s data from the United States reassured investors that the Fed would go for a 25 bps rate hike tomorrow, there wasn’t a noteworthy market reaction. The US Bureau of Labor Statistics announced that the inflation measure by the core-CPI rose to 0.2% and 2.2% in May on a monthly and yearly basis respectively, both figures matching the market expectations.
Later in the session, a report published in The Wall Street Journal claimed that Federal Reserve Chairman Jerome Powell was considering to hold a press conference after each meeting to dismantle the idea of the FOMC making changes to the monetary policy only when there is a presser. This article created speculations that the Fed may be looking to make more rate hikes than initially anticipated and helped the greenback gather strength.
Although there is no official word on the matter, the US Dollar Index rose to a 7-day high at 93.92. As of writing, the index was at 93.81, up 0.27% on the day.
Ahead of tomorrow’s FOMC meeting, the pair is unlikely to make decisive moves in either direction. The Fed is widely seen as making a 25 bps rate hike tomorrow and the updated economic projections, the dot plot, and Powell’s speech will be looked upon for fresh impetus.
Technical outlook
The immediate resistance for the pair aligns at 0.7020 (50-DMA) followed by 0.7100 (200-DMA/psychological level) and 0.7150 (100-DMA). On the downside, supports are located at 0.7000 (daily low/psychological level), 0.6960 (Jun. 1 low) and 0.6880 (May 29 low).
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