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NZD

NZD/USD bulls eye 0.6300 as Fed expects no more rate rises

NZD/USD has cleared the significant threshold of 0.6250 during a risk-on solid trend. Federal Reserve officials favor the interest rate rise slowing regime to lower financial risks. The New Zealand Reserve Bank expects the interest rate to peak at 5.5 percent. RBNZ-Fed policy divergence has increased, and NZD/USD seeks to break through the round-level resistance of 0.6300.

After overcoming the crucial barrier of 0.6250 during the Asian session, NZD/USD is moving upward intensely. The Kiwi Dollar has significantly increased in popularity as market confidence soars. NZD has renewed its three-month high at 0.6270 and has kept up its two-day winning run. In the absence of any indications that the bullish market attitude would weaken, the major is vulnerable to touching the round-level resistance of 0.6300.

Demand for the US Dollar has decreased due to a significant increase in investors’ risk appetite. The US Dollar Index (DXY) has given up its 106.00 cushions and is plummeting like a house of cards. The strong US dollar wants to hit its three-month low at 105.34. S&P500 futures are showing gains ahead of the US holiday associated with Thanksgiving Day. Investors’ lack of confidence in the Federal Reserve’s fifth 75 basis point (bps) rate rise period has caused the 10-year US Treasury rates to fall below 3.69%. (Fed).

The Federal Reserve’s officials advocated for slowing the rate of interest rate increases.

The October inflation data was good, which helped the Federal Reserve’s officials feel better. Jerome Powell, the head of the Fed, and his allies are working nonstop to stabilize prices. Federal Open Market Committee (FOMC) minutes show that the Federal Reserve is pleased with a drop in the headline Consumer Price Index (CPI). Most Federal Reserve officials have advocated for a reduction in an interest rate increase to decrease financial risks and track the development of past efforts in the form of restrictive policy measures.

The US dollar has significantly decreased as a consequence of this. For the monetary policy meeting in December, Fed chair Jerome Powell will switch to a half-percent rate increase extent due to the persistence of inflation in the US economy.

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Positive US orders for durable goods failed to support the US dollar.
Market players consistently wait for signs that show household demand before projecting Consumer Price Index (CPI) numbers. In October, consumer demand for durable goods increased by 1% in the United States, above expectations and the previous report of 0.4%. This suggests that consumer demand is strong and that core CPI may see future stagnation. This might stop the Federal Reserve’s effort to decrease interest rates.

It is important to note that American families manage their costs with less income. Rising interest rates will increase the amount of interest that must be paid on purchases of durable items, which might accelerate the cost of delinquency for credit providers.

The Reserve Bank of New Zealand anticipates a 5.5% interest rate peak.  Governor Adrian Orr of the Reserve Bank of New Zealand raised the OCR by 75 basis points on Wednesday. The Federal Reserve and Reserve Bank of New Zealand’s policy divergence have deepened.

The Reserve Bank of New Zealand abandoned its 50 basis point rate hike regime in favor of a larger rate increase to strengthen its battle against an unprecedented rise in inflation. The RBNZ increased its OCR earlier by 50 bps five times in a row. Since the price pressure in the New Zealand economy has not yet shown symptoms of tiredness and a peak, the tightening of monetary policy will continue to quicken. The Reserve Bank of New Zealand has also offered a 5.5% interest rate peak.

The Federal Reserve’s aggressive interest rate forecasts and widened Reserve Bank of New Zealand policy divergence are anticipated to boost the Kiwi Dollar, even more, pushing the NZD/USD exchange closer to 0.6300.

Technical forecast for NZD/USD

NZD

Daily, NZD/USD is moving toward the horizontal resistance set from the high on August 12. The asset is comfortably above the 61.8% Fibonacci retracement at 0.6103 (located between the peak on August 12 at 0.6469 and the low on October 13 at 0.5560). For the first time in the previous seven months, NZD/USD has crossed the 200-period Exponential Moving Average (EMA) at 0.6233.

The Relative Strength Index (RSI) (14) is now swinging in a bullish area of 60.00-80.00, which suggests that the Kiwi Dollar has risen further.

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