The uptrend has lost its intensity. On the chart we can see the formation of a new trend since January 2018, which is currently flat, but has a chance to transform into a downtrend in favor of the USD.
There are a number of factors that support and strengthen the dollar such as strong economic statistics, which have a positive impact on the value of the dollar, enhanced by information from the FED. The protocol of the last FED meeting showed an optimistic attitude by the officials and plans to raise the rate. Yesterday the new head of the FED, Jerome Powell, confirmed the plans of a further rate increase. In his opinion, the US economy is in the best condition in a long time. Inflation is at an optimal level, unemployment is gradually declining, which is proof of the need to raise the rate. Thus, Powell has shown dedication to the “hawkish” policy. He is also optimistic and forecast further economic growth.
Based on the positive speech of the FED chairman, the dollar strengthened against major currencies. The strengthening against the New Zealand dollar was the most rapid amid news from the United States because at the same time the NZD was under pressure due to the release of data about the trade balance, which in January was negative and amounted to -566 million NZD. A month earlier, in December 2017, the balance was positive by 595 million. As for January, it was the largest trade deficit since 2007. The reason was the fall in exports, which grew by only 9.5%, while exports growth amounted to 17.1% - almost twice more than the exports growth rate.
As a result of the USD strengthening, the rates were consolidated in a wide range of 0.7186 - 0.7428 USD. Oscillators (RSI, MACD, Stochastic) unanimously point to the oversold area, so there is a high probability of a price correction, in accordance with the upward trend. But there are also all the prerequisites for continuing to strengthen the dollar, which may soon lead to a breakout of the level of 0.7186, which is currently the entry point for opening the short deals that can be effective in the medium term. Upon short-term trading, the most effective would be the deals to Buy.
