ANZ Research discusses the markets conditions and its expectations for USD, AUD, NZD next week.

"US economic data in recent days gives the Fed little excuse to stop tightening, with the latest CPI numbers showing higher core services inflation. Auxiliary measures of inflation, including various regional Fed measures of CPI, support this message, "ANZ notes.

"Against this background, we think markets have underestimated the Fed’s resolve to continue tightening policy. Combined with the risk-off environment, this could mean, for the short term, DXY strengthens after the FOMC, with the upper limit for any potential rally capped at the 100dma near 105, followed by the 200dma near106.6. By deduction, we think the AUD and NZD look biased to the downside in the week ahead, with tests of last week’s YTD lows not out of the question for both currencies," ANZ adds.