Well the past 12 hours have been full of activity especially after the much awaited Fed Fund Rate decision then the explosive news from both RBNZ and the BOJ which in my opinion will change the general outlook of this pair in the long run. To start off, the Feds decided to keep the Fund Rate unchanged at 0.05% with the committee particularly looking on the inflation expectation over the long run which will determine if the rate will be increased. The committee also added that incoming economic data will form a basis for either the progressive increasing or maintaining of Fund Rates in the long run. Momentarily, this statement ignited a USD demand but not much volatility as it only changed 50 pips on this pair. The RBNZ also maintained its interest rates at 2.25% and pointed out the USD is overvalued at the moment with Dairy product prices only rising to break even for most farmers. In their statement they also mentioned about the global monetary policy decision which pushes interest rates to negative territory and said that they will be watching policy setting of major central banks before initiating an action.
With this news let’s see what happened on the charts:
Daily Chart Analysis
Technically speaking the support trend line which was formed after mid January reversal still holds and it was from there when this pair reversed to the upside after the RBNZ news. For once after the news were released, the 5 month resistance was broken and price action shifted from 0.682 regions to 0.693 level and that is where price action is trending at the moment.
Other news to watch today got to be the US Unemployment claims to be released at 1230PM GMT and is projected to be at 258K from last week’s 247K and with this kind of news, and especially if it turns out positive then the upside will prevail.
4HR Chart Analysis
From the charts above, there is a clear swing from the oversold region of the stochastics and a reaction from the support trend line clearly formed on the daily chart. It is also important to note that the 200 day moving average forms a very phenomenal support line too with price bouncing off from it after the release of that RBNZ interest rate decision. The upward momentum is too strong and it shall be critical to initiate longs after all corrections to the downside.
15Min Chart Analysis
Right at the end of the New York session we saw that explosive 110 pip rally of the USD after the RBNZ released its news with price action shifting later reversing to the 100 Fibonacci level before picking off to the current prices. We shall expect price to trend even higher to the 161.8 level before it corrects and provide a ripe buy opportunity. Both OBV and Stochastics are skewed on the bullish trend with specifically the OBV developing a positive slope meaning the momentum will be increasing in due course.
We shall be looking to open long positions on this pair after both Yellen and RBNZ decisions to hold rate in the mean time and with other US Unemployment claims set to be released at 1230 GMT, we shall be looking to buy at all lows after every price dip.
That’s it for today, have a pipful day.