After 175 basis points of hikes last year, several months ago, Indonesia policy makers hinted that it would consider ease monetary policy. The US also started to raise rates last year too, before the Powell Pivot. The Power Pivot or Powell Put refers to the Fed Powell’s change in approach to monetary policy. Fed Powell was trying to get the US interest rates to neutral, meaning getting the federal funds rate to a point that neither stimulates nor restrains economic growth, but the Markets forced him into a dovish position.
This past week both the US and Indonesia lowered their interest rates. For the US, it’s their second time this year and for Indonesia, it’s their third time this year of lowering rates.
Indonesia’s central bank cut its key interest rate for a third straight month and took a series of other steps to bolster growth amid a deepening global economic slowdown.
Thursday’s move is “a preemptive step to support the momentum of domestic economic growth amid slowing global economic conditions,” Bank Indonesia Governor Perry Warjiyo told reporters. “This policy is consistent with an estimate for inflation to remain low at below the midpoint of our target range and with the yield of domestic financial assets remaining attractive.”
So where is the USDIDR head next, lets go to the charts to find out?
Monthly Chart (Curve Timeframe) – monthly supply is at 73.500 and monthly demand is at 63.500.
Weekly Chart (Trend Timeframe) – the trend is sideways.
Daily Chart (Entry) – the trade set-up was missed already, but if price can drop further, then pull back, the chart suggests to short at the potentially newly created supply zone.