The market has dropped on the back of the recent FOMC statement, as the FED kept with the picture and raised interest rates by 25 basis points, but then played it safe with a dovish statement. This is not unusual behaviour from Yellen and the FED who have tried not to repeat the mistakes of the past by pumping up the economy, but instead being focused on consistent growth and no bubbles in the market. It was for the most part a positive statement if you look at the American economy, with employment likely to continue to remain strong and inflation to return to 2% in the medium term  – something that is highly desired in the current economy. Expectations are now that we will see another two rate rises this year and the FED will act more aggressively if economic data warrants it. The question will be now if Trumps policies can indeed stimulate the economy heavily in 2017 and cause large economic expansion. At this stage it’s a little uncertain, but what is clear is that the US economy continues to see steady growth and that is a positive sign for global markets.

My expectation yesterday was potentially that the USDJPY could see some strong volatility and look to go higher, however with the dovish result from the FED the USDJPY has since dropped on the charts as USD selling has been strong. For now the USDJPY is looking to trend downwards to support at 111.655 and it will likely continue to range until we see further economic data. One of the key things to keep watch of though, is the 100 day moving average which is trending strongly upwards and the USDJPY is just short of at present. If we see the bulls look to take control at this point it could point to further momentum, but at this stage it’s a wait and see game for the USDJPY and whether it will break out its ranging pattern.

NZ traders will also be looking for a second wind as the NZDUSD is set for some big moves as the GDP figures are due out shortly.  Expectations so far are that the q/q results will be weaker than the previous quarter, however the nature of the New Zealand economy is that it can be quite unpredictable at times and a surprise boost could see the NZDUSD push higher on the charts.

The key thing for the NZDUSD if it’s bullish is that the 100 day moving average (dark blue) is likely to act as stiff resistance against movements. I would anticipate that this would be a key dynamic level, it’s also worth noting on the daily chart that every wave thus far has been getting weaker and weaker which shows a long term bearish trend. But for now there seems to be very strong support around the 0.6887 mark, and I don’t expect this to change in the near term given that global risk appetite has increased.