- NZD/USD ticks higher following the release of domestic inflation figures, albeit lacks follow-through.
- Hawkish Fed expectations continue to act as a tailwind for the USD and cap the upside for the pair.
- Traders also seem reluctant amid global economic woes and ahead of important US macro releases.
The NZD/USD pair struggles to capitalize on its modest gains registered during the Asian session on Wednesday and remains well within the striking distance of a near two-month low, around the 0.6065-0.6060 area touched the previous day. Spot prices currently trade just below the 0.6100 mark, nearly unchanged for the day, though a combination of factors could help limit deeper losses.
Statistics New Zealand reported that domestic consumer inflation decelerated from the 5.6% YoY rate to 4.7% in the final three months of 2023, though remained well above the Reserve Bank of New Zealand's (RBNZ) 1% to 3% target. This, in turn, limits the likelihood of a near-term interest rate cut by the central bank, which, along with subdued US Dollar (USD) price action, could lend some support to the NZD/USD pair.
The downside for the USD, however, seems limited amid expectations that the Federal Reserve (Fed) will not rush to cut rates in the wake of a still-resilient US economy. This, along with the risk of a further escalation of geopolitical tensions in the Middle East and the uncertain global economic outlook, might continue to act as a tailwind for the safe-haven Greenback and cap any meaningful gains for the risk-sensitive Kiwi.
Traders might also refrain from placing aggressive directional bets and prefer to wait for important US macro releases – the Advance Q4 GDP print and the Core PCE Price Index – scheduled during the latter part of the week. In the meantime, the flash US PMIs, along with the US bond yields and the broader risk sentiment, provide some impetus to the NZD/USD pair later during the early North American session on Wednesday.
Nevertheless, the aforementioned fundamental backdrop makes it prudent to wait for strong follow-through buying before confirming that the NZD/USD pair has formed a near-term bottom and positioning for any further appreciating move. On the flip side, a break below the 0.6065-0.6060 area will be seen as a fresh trigger for bearish trades and set the stage for an extension of a near one-month-old descending trend.
Technical levels to watch
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
AUD/USD traders seem non-committed around 0.6500 amid mixed cues
AUD/USD extends its consolidative price move just above 0.6500 on Friday. The RBA's hawkish and upbeat market mood supports the Aussie, though mixed Australian PMI prints fail to inspire bulls. Moreover, bets for a slower Fed rate-cut path continue to fuel the post-US election USD rally and cap the currency pair.
USD/JPY slides to 154.00 as higher Japanese CPI fuels BoJ rate-hike bets
USD/JPY languishes near 154.00 following the release of a slightly higher-than-expected Japan CPI print, which keeps the door open for more rate hikes by the BoJ. That said, the risk-on mood, along with elevated US bond yields, could act as a headwind for the lower-yielding JPY and limit losses for the pair amid a bullish USD, bolstered by expectations for a less dovish Fed and concerns that Trump's policies could reignite inflation.
Gold price advances to near two-week top on geopolitical risks
Gold price touched nearly a two-week high during the Asian session as the worsening Russia-Ukraine conflict benefited traditional safe-haven assets. The weekly uptrend seems unaffected by bets for less aggressive Fed policy easing, sustained USD buying and the prevalent risk-on environment
Ethereum Price Forecast: ETH open interest surge to all-time high after recent price rally
Ethereum (ETH) is trading near $3,350, experiencing an 10% increase on Thursday. This price surge is attributed to strong bullish sentiment among derivatives traders, driving its open interest above $20 billion for the first time.
A new horizon: The economic outlook in a new leadership and policy era
The economic aftershocks of the COVID pandemic, which have dominated the economic landscape over the past few years, are steadily dissipating. These pandemic-induced economic effects are set to be largely supplanted by economic policy changes that are on the horizon in the United States.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.