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NZD/USD

NZD/USD lacks follow-through selling below 0.6300

NZD/USD is still trading in a defensive position below the 0.6300 line, and there is a lack of follow-through selling. On Tuesday, the NZD/USD currency pair could not capitalize on the bullish rise that occurred the previous day, and there was some selling activity in the area around the 0.6300 level. The team has been trading at lower levels during the early part of the European session and has dropped to a new daily low, hovering around the 0.6270 level over the last hour.

The recent bullish surge in the markets has been kept in check by growing concerns about a worldwide economic slowdown. These concerns and tensions between the United States and China about Taiwan operate as a headwind for the risk-sensitive New Zealand Dollar. Despite this, a more bearish sentiment around the US currency supports the NZD/USD, which should assist prevent any further losses.

The trend of investors moving their money into safer assets has continued to put downward pressure on rates on US Treasury bonds, which is perceived as eroding the dollar’s value. The optimistic US employment data released Friday lends credence to rumors that the Federal Reserve would maintain its aggressive policy tightening course. These rumors strengthen the potential for the development of some USD dip-buying.

The financial markets are pricing in a probability of almost 70 percent that the Fed will raise interest rates by 75 basis points at its meeting in September. The predictions were validated by the statements made by Fed Governor Michelle Bowman on Saturday. She said the US central bank might contemplate further increases of 75 basis points at the following meetings to bring inflation back down.

NZD/USD

As a result, the newest US consumer inflation numbers, scheduled to be released on Wednesday, will continue to command the market’s attention. The Consumer Price Index data from the United States would be closely examined for any new information that may provide light on the Fed’s strategy. This, in turn, would play an essential part in deciding the short-term direction of the NZD/USD pair and impacting the USD’s price dynamics shortly.

Traders may find it preferable to take a wait-and-see approach for the time being in the absence of significant market-moving economic announcements from the United States. Even from a purely technical standpoint, the current range-bound price action seen over the previous two weeks or so indicates that traders are undecided, which calls for some caution before initiating aggressive bets on the NZD/USD pair.

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