NZD/USD has been quite bearish in the last two weeks, as it keeps making lower lows, while moving averages continue to provide resistance at the top during retraces higher. The 100 SMA (green) was doing that job initially, then the 500 SMA (yellow) took over, which indicates that the bearish trend has been picking up pace recently.

NZD/USD H1 Chart – The Retrace Higher Seems Complete

The 50 SMA acting as resistance at the top

Reserve Bank of New Zealand governor made some comments yesterday suggesting that the RBNZ might pause with rate hikes soon, after this month’s meeting. The FED on the other hand is keeping the hawkish stance and will continue to raise rates. The Chicago FED president Evans made some comments on CNBC earlier, suggesting that the FED will keep raising interest rates. NZD/USD has been retracing higher in the last few sessions, but it has reached the 50 SMA again on the H1 chart, so we decided to open a sell forex signal, since the stochastic indicator is overbought as well.

Remarks by Chicago Fed president, Charles Evans, to CNBC

• Getting inflation under control is the priority
• Sees year-end rate consensus of 4.25% to 4.50%
• Tougher rate environment will be here for a while
• My outlook is roughly in line with FED median assessment of rates at 4.25% to 4.50% at year-end
• At some point, it will be appropriate to slow the pace of rate increases and hold rates for a while to assess the impact on the economy
• Our actions will result in below-trend growth and softening of labour market
• But failing to restore price stability would result in far greater costs
• Many of the risks to the Fed’s outlook appear to be on the downside
• Expects inflation to cool substantially over the next couple of years
• Full speech

He also stresses that fiscal responsibility is very important, which seems like an anecdote after the whole situation with the UK at the moment. As for the policy remarks, there isn’t anything that we don’t already know as the Fed continues to stay the course in its tightening path.

This isn’t anything new and with Evans saying that his view is more or less in line with the general FOMC outlook, there isn’t much to really look too much into the remarks above. The only thing perhaps is the soft landing versus hard landing debate but then again, the FED is in a much, much better position to avoid that argument for now as compared to the likes of Europe and the UK at least. This means that they can keep hiking rates a bit longer which will keep the USD bullish.

NZD/USD Live Chart