- NZD/USD recovers modestly after sliding toward 0.7230 on Wednesday.
- US Dollar Index erases large part of Tuesday’s losses.
- US Durable Goods Orders data and FOMC policy announcements awaited.
The NZD/USD pair posted its highest daily close in two weeks at 0.7237 on Tuesday but struggled to preserve its bullish momentum. After sliding to a daily low of 0.7214 during the early trading hours of the European session, the pair staged a technical correction and was last seen trading with small losses at 0.7232.
Focus shifts to FOMC
The renewed USD strength on Wednesday seems to have put NZD/USD under bearish pressure. A sharp decline witnessed in the EUR/USD pair after European Central Bank (ECB) policymaker Klass Knot said they had tools to counter further euro appreciation provided a boost to the greenback. At the moment, the US Dollar Index, which lost 0.24% on Tuesday, is up 0.23% at 90.37.
Later in the day, the Durable Goods Orders data from the US will be looked upon for fresh impetus. More importantly, the US Federal Reserve will announce its interest rate decision and publish the policy statement.
Previewing the FOMC’s January meeting, “we do not expect any major policy changes tonight after the Fed changed its QE forward guidance at the December meeting,” said Danske Bank analysts. “We expect Fed Chair Powell will be asked about the tapering process on the back of the previous weeks’ discussions.”