Fed Chair Powell Testifies, RBNZ Decides on Interest Rates

USD-traders Await Fed Chair Powell’s Testimony

The dollar traded higher against most of the other G10 currencies on Monday and during the Asian morning Tuesday. It gained the most against EUR, NZD and CHF, while it underperformed only versus AUD, NOK and GBP.

AUD/USD — Technical Outlook

Recently, after finding support near its almost-11-year low, at 0.6662, AUD/USD rebounded and is now drifting a bit higher. That said, for now, this move higher could be seen as a temporary correction, as the pair still remains below a short-term downside resistance line drawn from the high of January 16 th. If that line stays intact, this could result in another round of selling soon, hence why we will take a cautiously-bearish approach for now.

Will the RBNZ Cut, or Wait for a While More?

As for tonight, during the early Asian morning, we have a central bank deciding on interest rates and this is the RBNZ. This will be one of the “bigger” meetings, where apart from the decision, the statement and the minutes, we also get the quarterly Monetary Policy Statement (which includes updated economic projections), as well as a press conference by Governor Adrian Orr.

NZD/CHF — Technical Outlook

Yesterday, NZD/CHF got held near the 0.6235 support area, from which the rate pushed up this morning. Given that the pair looks slightly overstretched to the downside on the shorter-time frames, we may get a bit of a corrective move higher. Our oscillators, the RSI and the MACD, started pointing north, which could support the idea of a near-term upside correction. That said, let’s not forget that this move upwards might be short-lived, as NZD/CHF is still trading below its short-term tentative downside resistance line drawn from the high of December 31 st. Thus, although we may see a bit of recovery to the upside, still, we will stay cautiously bearish overall.

As for the Rest of Today’s Events

During the European morning, we get a string of data releases from the UK. Kicking off with the preliminary GDP for Q4, expectations are for the qoq rate to have held steady at +0.4% qoq, but this will drive the yoy rate down to +0.8% from +1.1%. What’s more, following the first increase after 5 quarters of declines, business investment is expected to have tumbled again in Q4. Specifically, expectations are for a 1.3% yoy slide following a 0.5% growth in Q3. Both the industrial and manufacturing production yoy rates are expected to have risen in December but to have remained within the negative territory, while the nation’s trade deficit for the same month is forecast to have widened.

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