- NZD/USD marches toward 0.6100 as RBNZ’s hawkish interest rate outlook strengthens the Kiwi dollar.
- The RBNZ kept its OCR steady at 5.5% for the sixth time in a row.
- Investors await the US Inflation data that will influence expectations for Fed pivoting to rate cuts.
The NZD/USD pair advances toward the round-level resistance of 0.6100. The Kiwi asset exhibited strength in Wednesday’s European session as the Reserve Bank of New Zealand (RBNZ) delivered hawkish guidance after keeping its Official Cash Rate (OCR) unchanged at 5.50%.
The RBNZ hold its OCR steady at 5.50% for the sixth time in a row. The RBNZ commented that the monetary policy will remain restrictive to maintain downward pressure on inflationary pressures. The New Zealand economy is going through a rough phase as it remained in a technical recession in the second-half of 2023. Though the RBNZ needs to make a balance as annual inflation at 4.7% is significantly higher than the desired range between 1% and 3%.
Meanwhile, investors await the United States Consumer Price Index (CPI) data for March, which will be published at 12:30 GMT. According to economists, monthly headline and core inflation data are projected to have increased by 0.3%, higher than the pace of 0.17%, which is required for inflation to come down to the 2% target. This would not convince Federal Reserve (Fed) policymakers to consider rate cuts by the first half of this year.
The appeal for the US Dollar will strengthen if the inflation data turns out hotter than expected. Currently, the US Dollar Index (DXY), which tracks the US Dollar’s value against six major currencies, is slightly down to 104.00.
NZD/USD continues its winning spell for the third trading session on Wednesday. The Kiwi asset recovers to 50% of the Fibonacci retracement (plotted from March 8 high at 0.6218 to April 1 low near 0.5940), which is at 0.6080. The asset remains above the 20-day Exponential Moving Average, which trades around 0.6040, suggesting that near-term demand remains intact.
The 14-period Relative Strength Index (RSI) approaches 60.00. If the RSI manages to break decisively above that level, bullish momentum will trigger.
Further upside above March 18 high at 0.6100 will drive the pair toward March 12 low at 0.6135. A breach of the latter will drive the asset to 78.6% Fibo retracement at 0.6160.
In an alternate scenario, a downside move would appear if the asset breaks below April 5 low of 0.5985. This would drag the asset toward November 17 low at 0.5940, followed by the round-level support of 0.5900.
NZD/USD four-hour chart
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
GBP/USD tepid as UK election results poised to match early polls, US NFP looms ahead
GBP/USD traded in a tight range on Thursday as Cable traders await final results from the UK’s Parliamentary Election, and markets gear up for a fresh round of US Nonfarm Payrolls slated for Friday. US markets were dark on Thursday, crimping overall market flows during the American trading window, but are slated to return on Friday.
AUD/USD holds its ground, markets eye key NFPs from the US from June
The Australian Dollar held its ground against the USD, maintaining itself in highs since January. This is despite the weaker-than-expected Trade Surplus figures reported during the Asian session as the USD remains weak following Wednesday’s set of soft economic figures reported.
Gold price consolidates amid choppy trading ahead US NFP
Gold price edge up 0.15% amid thin trading on US Independence Day. XAU/USD reached a two-week high of $2,365 Wednesday, driven by weak US jobs data and heightened Fed rate cut expectations. Traders shift focus to Friday's NFP report.
Ethereum bears gain momentum after ETH breaches key support level
Ethereum is down more than 5% on Thursday following the US SEC failure to approve ETH ETF issuers' S-1 drafts. Meanwhile, the recent decline has strengthened the bearish outlook after ETH moved below a key support level, sparking $90 million in long liquidations.
Labour wins a landslide, as Pound is unconcerned by Starmer government
What a difference five years makes, Labour have turned themselves around and are on course to win 410 seats and a 170-seat majority, according to the exit polls conducted by the main UK broadcasters.