Anna 
The NZD/USD pair is currently in a consolidation phase, trading around 0.6120 during the early European session on Wednesday. Here are key factors influencing the pair’s movement:
USD Strength Ahead of FOMC Decision: The US Dollar (USD) is experiencing appreciation against the New Zealand Dollar (NZD) ahead of the Federal Reserve’s (Fed) interest rate decision later in the day. Market participants appear to have already priced in expectations that the Fed will maintain its current policy stance in the January meeting.
US Dollar Index (DXY) and Treasury Yields: The US Dollar Index (DXY) has rebounded after three consecutive days of losses, reaching near 103.60. However, the decline in US Treasury yields, with both the 2-year and 10-year yields lowering, could potentially exert pressure on the US Dollar.
RBNZ’s Hawkish Stance: The Reserve Bank of New Zealand (RBNZ) Chief Economist Paul Conway has adopted a hawkish stance, resisting expectations for rate cuts. Conway expressed a cautious but optimistic outlook on the effectiveness of the current monetary policy measures.
ANZ Business Confidence Report: The ANZ Business Confidence report for New Zealand shows a positive change in business outlook, with a rise to 36.6 in January. This suggests an improvement in sentiment among businesses regarding the economic environment. However, the ANZ Activity Outlook, measuring expectations for firms’ own activity, registered a slight decrease.
Intraday Consolidation: The NZD/USD pair is currently consolidating, and the decline in the ANZ Activity Outlook may indicate a more cautious approach among traders before making aggressive bets on the currency pair.
As the market awaits the outcome of the Fed’s decision and assesses the broader economic indicators, the NZD/USD pair is likely to experience intraday volatility. Traders will closely monitor the Fed’s policy statement and any guidance provided by Fed Chair Jerome Powell during the post-meeting press conference for potential market-moving cues.
