NZD/USD holding ground sub 0.68 the figure

• NZD/USD comes back under pressure as the fade plays out. 
• The Fed surprised markets but the US dollar was sold off due to stubbornly bullish US stocks.

NZD/USD is up on the day following a slide from the lows of 0.6833 to a low of 0.6757 from where the price has started to recover, currently trading near 0.6798. The bulls have been pressured as the greenback attempts to recover the Federal reserve aftermath losses. 

The Federal reserve, despite being uber hawkish on Wednesday, has led to a sell-off in the US dollar. This has been put down to a ''buy the rumour sell the fact'' outcome of the event in irregular holiday markets conditions. Volatility in the forex space is at a year's high, so this to might have played into the counterintuitive outcome for the greenback and stocks. 

''The idea that a gradual tightening in policy can put the economy on a smooth glide-path back to growth and inflation equilibrium is implausible, but after 20 years of ‘buy the dip' the equity market is trained to look on the bright side of life,'' analysts at Societe Generale argued. 

The Fed's Chair Powell noted the economy is “making rapid progress toward maximum employment” and all committee members see that test being met next year. (The unemployment rate is now expected to fall to 3.5% in late-2022, matching the past cycle’s low.)

The most hawkish of all was the significant shift in the dot plot—whereas committee members were previously evenly split on raising rates once next year, today’s projections show most now expect three rate hikes in 2022 and another three in 2023.  This means that there is a clear risk of earlier liftoff than what markets had been anticipating. Nevertheless, the slump in the USD saw the Kiwi rise above 0.68 the figure before it was quickly sold off from there in what was a bearish engulfing candle.

Meanwhile, analysts at ANZ Bank explained that now we are past the halfway mark in December and in past years that have been associated with seasonal NZD strength (even if that should be priced in). ''Having bounced nicely off 0.67, the technical picture is also looking a bit more composed as we head into the holidays.''