- NZD/USD rises for the second day in a row amid modest USD weakness.
- Expectations of an imminent pause in the Fed’s rate hike cycle weaken the USD.
- Market caution prevents the risk-sensitive NZD from advancing further.
He NZD/USD gains some positive traction for the second day in a row on Tuesday and maintains its buying tone throughout the early part of the European session. However, the pair lacks bullish conviction and remains below the round 0.6100 levelwhich warrants some caution before positioning for an extension of the recent bounce from last week’s low.
The US dollar (USD) is trading with a slight negative bias amid the expectations of an imminent pause in the Federal Reserve rate hike cycle (Fed) and it turns out to be a key factor that lends some support to the NZD/USD pair. In fact, current market prices indicate a higher probability that the US central bank will leave interest rates unchanged at the end of a two-day monetary policy meeting on June 14. These expectations were bolstered by the disappointing release on Monday of the US ISM services PMI, which fell to 50.3 in May.
This builds on last week’s dovish rhetoric from various FOMC officials and reaffirms market expectations that the US central bank will not raise interest rates next week. Expectations, meanwhile, led to a sharp intraday drop in US Treasury yields and keeps USD bulls on the back foot, which in turn supports the NZD/USD pair. Having said that, market caution caps losses from the safe-haven USD and caps any significant rise in the NZDsensitive to risk.
Apart of this, the explicit signal from the Reserve Bank of New Zealand (RBNZ) that it had ended its most aggressive cycle of hikes since 1999 could stop bulls from taking aggressive positions around the NZD/USD pair. Looking ahead, no market-relevant economic data will be released in the US, leaving the dollar at the mercy of US bond yields. This, coupled with the broader risk sentiment, could allow traders to take advantage of some short-term opportunities around the pair.
NZD/USD technical levels to watch
|Last price today||0.608|
|Today I change daily||0.0011|
|today’s daily variation||0.18|
|today’s daily opening||0.6069|
|previous daily high||0.6086|
|previous daily low||0.6041|
|Previous Weekly High||0.6112|
|previous weekly low||0.5985|
|Previous Monthly High||0.6385|
|Previous monthly minimum||0.5985|
|Fibonacci daily 38.2||0.6069|
|Fibonacci 61.8% daily||0.6058|
|Daily Pivot Point S1||0.6044|
|Daily Pivot Point S2||0.602|
|Daily Pivot Point S3||0.5999|
|Daily Pivot Point R1||0.609|
|Daily Pivot Point R2||0.6111|
|Daily Pivot Point R3||0.6136|
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.