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Kiwi benefits from USD profit taking

FXStreet (Bali) - Profit taking ahead of the FOMC is leading to a broad-based USD retreat in Asia, with the Kiwi particularly benefiting from these dynamics, currently flirting with the 0.82 round number after a 0.8120 low on Monday.

Jim Langlands, Founder at FXCharts, warns on the risks of holding too large exposure on US Dollars ahead of the FOMC, which may result in further upside in NZD/USD short term, an outcome which would be in line with short term indicators.

Jim notes: "Market turns its focus towards the FOMC, first thing Thursday morning (NZ time), to be followed immediately by the NZ Q2 GDP. It may be wise to cover some short positions in case the Fed are less hawkish than the market have decided they will be, and the GDP is above expectations, as the combination of these outcomes would provide a very nasty short squeeze."

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