Forex Market Analysis

Daily Market Update: FOMC Meeting, Euro PMI, Great Britain CPI


News Commentary



The Fed kept the interest rates unchanged in their last meeting. The Fed also expressed confidence that inflation could hit its 2% target. Investors will look today for more hints for the Fed’s plan of future interest rate hikes.

There was a development in the China-US tariff battle on Sunday, as US Treasury Secretary Steven Mnuchin said that the trade war was being ‘put on hold’. This made traders more optimistic to open their risk appetite.

With no update about NAFTA negotiations, investors began to fear as the 30-day exemption on steel and aluminium tariffs that Trump administration had given to Canada & Mexico is about to end on June 1.

Canada has demanded “full and permanent” exemptions from the tariffs. This may have some concessions in the NAFTA talks to convince Washington to exempt Canadian steel and aluminium imports.

The Euro regained some strength yesterday in front of most of the currencies. Today’s manufacturing & services are expected to be at 65.1 & 54.7 respectively. If the reading is on target, this will push the Euro higher to normalise the price.

GB is waiting for a big release on the CPI. The latest release was at 2.5%, as expected. Any higher reading would push the currency up as investors will be expecting a rate hike sooner rather than later.

RBNZ McDermott has noted “Currently no prospect of unconventional monetary policies” and continued “ […] not projecting a significant decrease in the cash rate.”

This made analysts at Morgan Stanley start to be bullish on the NZD/USD, referring to oversold technical indicators.



Chart Analysis



On the daily chart, the pair had broken the upward trend line from the low of 2009, but then the price made its way up to retest the trend, with oversold on RSI.

We can also notice that there’s a descending channel that the price has already broken, along with a harmonic pattern (BAT) which is already shaped. So, we can conclude that the last break beneath the upward trend line was a false break and the pair is about to restart its bullish momentum towards the resistance zone of 0.697-0.702.



The price is located at a very strong short-selling area, rebounding from the key resistance level at 111.1 and near the lower trend line from the high of 2015 also reversing from the top edge of the upward channel along with forming an AB=CD harmonic pattern with overbought on RSI. The price is about to reach the support level at 110.05, then it will be a decider zone as the price would meet this support along with the 200 moving average, the lower edge of the ascending channel, and the B point of the harmonic pattern

So, if the price bounces back up from this level, it would have its way back to 111.1 and further. If the price breaks beneath the ascending channel, it will retake the support 108.15


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