. NZD/USD Surges Near 0.5980: Powell's Dovish Comments

NZD/USD Surges Near 0.5980: Powell’s Dovish Comments

NZD/USD Surges Near 0.5980: Powell’s Dovish Comments

01 Apr 2024

The NZD/USD extends its upward trajectory, nearing 0.5980 on dovish comments from Fed’s Powell, US ISM PMI eyed.

FUNDAMENTAL OVERVIEW:

  • The NZD/USD advances as the Federal Reserve is anticipated to begin implementing rate cuts starting in June.
  • Federal Reserve Chair Powell remarked that recent US inflation data supports the Fed’s stance on rate cuts in 2024.
  • The NZD receives a boost from positive Chinese Purchasing Managers Index (PMI) figures.

During Monday’s Asian trading hours, the NZD/USD continues its upward momentum for the second consecutive session, approaching the 0.5980 level. This movement is attributed to the optimistic response of the NZD/USD pair to Federal Reserve Chairman Jerome Powell’s dovish remarks made on Friday. Powell mentioned that the recent US Personal Consumption Expenditures Price Index (PCE) data met expectations, affirming the Fed’s stance on potential interest rate reductions for the year.

Federal Reserve Board Governor Christopher Waller has restated his position that there’s “no urgency” to implement rate reductions, especially amidst persistent inflationary forces. Additionally, San Francisco Fed President Mary C. Daly has echoed this view, stressing that although the Fed is ready to modify rates depending on data, there’s presently no pressing requirement to do so, considering the strength of the US economy and the low likelihood of a downturn.

Conversely, the New Zealand Dollar (NZD) faces downward pressure due to speculation that the Reserve Bank of New Zealand (RBNZ) might initiate policy rate reductions beginning in early next year.

Moreover, RBNZ Governor Adrian Orr has suggested that the central bank is advancing in its efforts to return inflation to the target range. He also hinted that interest rates may have reached their highest point and that the likelihood of rate cuts is growing.

Moreover, the New Zealand Dollar (NZD) received a boost from encouraging Chinese Purchasing Managers Index (PMI) data, which indicated that Chinese manufacturing activity expanded for the first time in six months in March.

NZD/USD TECHNICAL ANALYSIS DAILY CHART:

Technical Overview:

NZD/USD is currently trading within a down channel.

NZD/USD is positioned below all Moving Averages (SMA).

The Relative Strength Index (RSI) is in the Selling zone, while the Stochastic oscillator suggests a Positive trend.

Immediate Resistance level: 0.5992

Immediate support level: 0.5955

HOW TO TRADE NZD/USD

NZD After experiencing a notable increase, the NZD/USD encountered resistance and subsequently declined. Currently, the NZD/USD is attempting to move towards the resistance zone. If it fails to break through this zone and faces rejection, further decline is possible.

TRADE SUGGESTION- LIMIT SELL – 0.6000, TAKE PROFIT AT- 0.5934, SL AT- 0.6047.