NZDUSD looks to FED as downside momentum builds

Following its rejection at a weekly trendline in the aftermath of the US inflation report, which may cause the Fed to proceed cautiously with its policy decision, the NZDUSD has seen more downward moves. The increase in monthly CPI has tempered speculations of an early rate drop by the Fed in 2024, aside from the CPI y/y and Core CPI m/m, which both supported disinflationary storylines.

Next, investors will be watching to see if the FOMC meeting today results in the Fed maintaining rates at 5.50% for a third consecutive meeting. Still, a lot of the market's trajectory may be influenced by the next news conference. The NZDUSD might see additional price declines away from the weekly trendline if the Fed continues to emphasize the necessity to keep rates at restrictive levels for an extended period. Alternatively, we should anticipate more upward action in the NZDUSD if the Fed gives a schedule for when it will start to reduce rates.