Quick Look
- NZD/USD declined today, trading around 0.6053, marking a 0.53% drop.
- The US Dollar Index (DXY) surged to two-week highs, surpassing the 103.80 mark.
- Market sentiments suggest a 73% probability of a rate cut by the Federal Reserve in July.
- China and New Zealand are enhancing their free trade agreement.
- Anticipation builds around the Federal Reserve’s forthcoming interest rate decision.
The New Zealand Dollar (NZD) versus the United States Dollar (USD) today declined. The pair traded around 0.6053, marking a 0.53% drop on the day. Initially trading near 0.6085, the pair came under selling pressure, influenced by various factors, including US dollar strength, expectations from the Federal Reserve, and developments in China-New Zealand trade relations.
Fed’s Rate Decision and Market Sentiment
The US Dollar Index (DXY), which gauges the dollar against a basket of six major currencies, witnessed an uptick to two-week highs, surpassing the 103.80 mark. This surge reflects broader market anticipations ahead of significant economic events and statements, particularly from the Federal Reserve (Fed).
The Fed is widely expected to maintain interest rates in its upcoming decision, marking a fifth consecutive pause. Moreover, market sentiments, as captured by the CME FedWatch Tool, suggest nearly a 73% probability of a rate cut come July. This anticipation stems from statements by Fed officials, including Chairman Powell, who hinted at a possible rate cut within the year, seeking more definitive evidence of inflation’s retreat towards the 2% target.
NZ-China Trade Talks Aim for Enhanced Agreement
On the trade front, China and New Zealand are moving towards an enhanced version of their free trade agreement. Furthermore, Chinese Foreign Minister Wang Yi recently expressed China’s readiness to collaborate with New Zealand on this front, underscoring the significance of this bilateral relationship.
The economic calendar is brimming with pivotal data releases and events that could influence the NZD/USD trajectory. New Zealand’s Westpac Consumer Survey for the first quarter and the Current Account figures are noteworthy among these, both scheduled for Wednesday. Additionally, the spotlight will be on the Fed’s interest rate decision and press briefing on Wednesday. This will be followed by New Zealand’s fourth-quarter GDP growth figures, anticipated at a modest 0.1% quarter-on-quarter increase, due Thursday.
Key Economic Data & Fed Briefing Set to Influence
Technical analysis reveals a bearish bias for NZD/USD, with the Relative Strength Index (RSI) entering negative territories. Furthermore, the Moving Average Convergence Divergence (MACD) indicator shows rising red bars. Despite this, the hourly chart suggests a potential shift towards positive momentum, indicating a possible reversal of the bearish trend.
Looking ahead, key support and resistance levels for NZD/USD are identified at 0.6100 and 0.6050, respectively. Market dynamics and upcoming economic indicators could drive significant price movements. A downside break below 0.6050 could lead to further declines towards 0.6000 and 0.5956. In contrast, an upside movement above 0.6200 might target subsequent levels at 0.6220 and 0.6260, signalling a potential reversal in the pair’s recent downtrend.
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