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NZDUSD, buyers building for a break higher?

July 28, 2022
by Joseph Jeffriess, Market Analyst

Welcome to Thursday’s update. Focus today is on the NZDUSD. The price failed to launch our consolidation after yesterday’s FOMC, but the pattern remains, and we continue to wonder if secondary momentum will see buyers confirm a breakout.

Early this morning, the FED increased rates to 2.50%. The statement seemed to reassure buyers and set off a sharp risk rally that covered most markets and sent the USD lower. Powell said they didn’t see the economy in a recession, and action showed that the FED is committed to fighting the current inflation issue. The Fed also advised that a time will come when rates rise slowly to assess their impact. This could have been seen as a hint that an end to the cycle could be nearing.

Regardless, we can’t take away from what happened this morning, and that was that risk markets liked what they heard and acted accordingly—strong upswings were seen across stock indexes, forex pairs, gold, oil and cryptocurrencies.

The NZDUSD rallied after the FOMC but remained capped at 0.6260 resistance. Today we’re seeing buyers test that level with a move outside, starting to push at a breakout. Yesterday’s candle was a failed break lower and, after holding, reconfirmed the new uptrend line. We have also seen a break of two down trendlines.

The OBV is also quite interesting at the moment. We haven’t seen a true breakout by price, but we are seeing a consolidation break on the OBV. Could this be a lead in volume increasing before price moves higher?

We will continue to watch price to see if buyers can take the next step.

NZDUSD D1 Chart

All times are AEST.