- NZD/USD falls sharply to 0.6100 as waned Fed rate-cut hopes weakens market sentiment.
- The market mood turns cautions as the Fed is expected to keep interest rates steady with a hawkish outlook.
- A slowdown in NZ’s disinflation progress has pushed RBNZ’s rate-cut expectations beyond 2024.
The NZD/USD pair struggles to gain ground near the round-level support of 0.6100 in Monday’s European session. The Kiwi asset falls on the backfoot as the US Dollar (USD) strengthened after the United States (US) Nonfarm Payrolls (NFP) report for May indicated a robust labor demand and strong wage growth, which diminished expectations for the Federal Reserve (Fed) to start easing the monetary policy from the September meeting.
The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, rises to an almost monthly high near 105.45.
Meanwhile, uncertainty among investors ahead of the US Consumer Price Index (CPI) data for May and the Fed’s monetary policy decision, which are scheduled for Wednesday, has also boosted the US Dollar’s demand. The market sentiment turns risk-averse as investors expect that the Fed would argue in favor of keeping interest rates at their current levels until they get evidence that price pressures will sustainably return to the desired rate of 2%,
On the Kiwi front, investors continue to reaffirm expectations in the Reserve Bank of New Zealand (RBNZ) holding its key Official Cash Rate (OCR) at their current levels beyond 2024 amid absence of signs indicating progress in the disinflation process.
NZD/USD drops after facing selling pressure near the horizontal resistance plotted from February 22 high at 0.6219. The Kiwi asset declines toward the 38.2% Fibonacci retracement support (plotted from the April 19 low of 0.5851 to the June 6 high at 0.6216) at 0.6076. The pair has slipped below the 20-day Exponential Moving Average (EMA), which trades around 0.6120. While the 50-day EMA near 0.6076 still acts as a support for the New Zealand Dollar bulls.
The 14-period Relative Strength Index (RSI) has slipped into the 40.00-60.00 range, suggesting that the upside momentum has faded. However, the bullish bias remains intact.
An upside move above June 6 high at 0.6216 will drive the asset January 15 high near 0.6250, followed by January 12 high near 0.6280.
On the contrary, fresh downside would appear if the asset breaks below April 4 high around 0.6050 This would drag the asset towards the psychological support of 0.6000 and April 25 high at 0.5969.
NZD/USD daily 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
EUR/USD retreats to 1.0700 area following post-PCE jump
After spiking to a daily high of 1.0720 with the immediate reaction to US PCE inflation data, EUR/USD lost its traction and declined to the 1.0700 area. Investors remain cautious ahead of this weekend's French election and make it difficult for the Euro to gather strength.
GBP/USD stays below 1.2650 after US inflation data
GBP/USD struggles to preserve its bullish momentum and trades below 1.2650 in the American session on Friday. Earlier in the day, the data from the US showed that the annual core PCE inflation declined to 2.6% in May, limiting the USD's upside and helping the pair hold its ground.
Gold keeps its daily gains near $2,330 following US PCE data
Gold prices maintain their constructive bias around $2,330 after US inflation readings gauged by the PCE matched consensus in May and US yields advance slightly across the curve.
BTC struggles around the $62,000 level
Bitcoin price faces pullback resistance at the lower band of the descending wedge around $62,000. Ethereum price finds support at $3,288, the 61.8% Fibonacci retracement level. Ripple price faces resistance at $0.500, its daily resistance level.
French Elections Preview: Euro to suffer after the calm, as specter of extremists, uncertainty rise Premium
The first round of French parliamentary elections is set to trigger high uncertainty. Soothing messages from the far right and far left leave the Euro vulnerable to falls. Calm may return only after the second round of voting on July 7.