Nzdusd rises on U.S. inflation decline and New Zealand rate cut

NZDUSD Analysis

Performance after Thursday
Period	Pct	Chg	Momentum
Thursday	1.66%	93.4 Pips
Week to-date	2.63%	147 Pips
April	1.13%	64.2 Pips

Upcoming key events (London Time)

Fri 01:30 PM USD PPI excluding Food and Energy sectors (12-mth)

What happened lately

In the United States, there have been several key developments in the economic landscape as per the latest data. The U.S. Monthly Treasury Budget Statement saw an improvement in March, depicting a reduced deficit of -$161 billion compared to -$307 billion in February, indicating better fiscal management or increased revenues. Inflation dynamics are also notable, with the Consumer Price Index (CPI) for the 12-month period decreasing significantly from 2.8% to 2.4% in March, and the core CPI, excluding volatile food and energy sectors, dropping slightly to 2.8% from 3.1% in the same timeframe. This downward trend in inflation could suggest easing price pressures in the economy. Additionally, the weekly Initial Unemployment Insurance Claims saw a marginal increase to 223K from the previous 219K, hinting at a slight uptick in unemployment claims, though still at relatively stable levels.

In New Zealand, the Reserve Bank has decided to cut the Official Cash Rate to 3.5% from the prior rate of 3.75%. This move likely reflects efforts by the central bank to stimulate economic activity, possibly in response to domestic economic conditions or concerns over global economic uncertainties.

The impact of these economic developments on the NZDUSD currency pair is quite significant. On Thursday, the pair observed a notable rise of 1.66% to 0.57358. The decline in U.S. inflation rates could reduce expectations for aggressive monetary tightening by the Federal Reserve, thereby putting downward pressure on the U.S. dollar. Conversely, the cut in the New Zealand interest rate could initially be perceived as negative for the Kiwi currency, but if the market interprets this as a proactive measure to boost economic growth, it could support NZD strength in the longer term. The current movements suggest that traders might be reacting to the combination of a slightly less hawkish U.S. monetary outlook and a strategic easing by New Zealand, leading to a stronger Kiwi dollar against the greenback.

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What can we expect from NZDUSD today?

NZDUSD on Thursday rose 1.66% to 0.57358. Price is above 9-Day EMA while Stochastic is rising.

Updated daily direction for NZDUSD looks bullish as the pair ended higher after Thursday trading session.

Looking ahead for the day, immediate upside resistance level is R1 at 0.57915 with break above could target R2 at 0.58471 or figure level area. While towards the downside, we are looking at daily low of 0.56274 as an important support. Break below this level could weaken the current bullish momentum. A break above 0.57651 may suggest continuation after recent positive movement.

For the week to-date, take note that NZDUSD is mixed as compared to the prior week.

Key levels to watch out:

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