- NZD/USD edges lower due to the hawkish sentiment surrounding the Fed.
- CME FedWatch Tool suggests the odds of a Fed rate cut in September have decreased to nearly 49.0%.
- The New Zealand Dollar may limit its downside as RBNZ is expected to maintain tightening policy for longer.
NZD/USD edges lower to near 0.6120 during the European trading session on Tuesday. US Dollar (USD) gains ground against the Kiwi Dollar as investors adopt a cautious stance ahead of the Federal Reserve’s (Fed) interest rate decision scheduled on Wednesday.
The Federal Reserve is anticipated to keep interest rates steady in the range of 5.25%-5.50% as it aims to curb inflation toward its 2% target. According to the CME FedWatch Tool, the likelihood of a Fed rate cut in September by at least 25 basis points has decreased to nearly 49.0%, down from 59.5% a week earlier.
The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against six major currencies, maintains its position due to the emergence of the hawkish sentiment surrounding the Fed regarding its policy tightening. The robust US jobs data for May has reduced the likelihood of the two Fed rate cuts in 2024.
On the Kiwi front, traders are likely awaiting China’s CPI and PPI reports on Wednesday for insights into the economic conditions of New Zealand’s largest export market.
High interest rates in New Zealand have continued to provide sustained support to the New Zealand Dollar (NZD) despite a weakening economy. The Reserve Bank of New Zealand (RBNZ) is expected to maintain a stable policy until at least mid-2025 to allow for a thorough data assessment.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD bounces off lows, approaches 1.1550
EUR/USD continues to recover ground lost and now extends the rebound to the 1.1550 zone on Friday. Meanwhile, the US Dollar maintain its bullish bias intact in response to a significant flight to safety amid increasing geopolitical concerns, while positive consumer sentiment data also contribute to the daily uptick.
Gold keeps the trade above $3,400 on safe-haven demand
Gold prices maintain its upward trajectory on Friday, reaching its peak level since late April above the $3,400 mark per troy ounce. Furthermore, the precious metal draws increased safe-haven interest amid escalating tensions in the Middle East, triggered by Israel's military action against Iran.
GBP/USD trims losses, retargets 1.3600
After an earlier dip toward the 1.3520 area, GBP/USD has regained some composure, trading within sight of the key 1.3600 barrier as the week draws to a close. The pair remains under pressure on Friday, weighed down by renewed US Dollar strength amid rising risk aversion and a stronger-than-expected consumer confidence report.
Crypto Today: Bitcoin, Ethereum, XRP clamber for support amid escalating volatility on Israel-Iran tensions
The cryptocurrency market has been hit by a sudden wave of extreme volatility, triggering widespread declines as global markets react to tensions between Israel and Iran. Bitcoin is hovering at around $104,668 at the time of writing on Friday, following a reflex recovery from support tested at $102,513.
Week ahead – Markets brace for central bank barrage amid heightened uncertainty
Fed officials to stand pat as they await further clarity. A dovish BoJ could push rate hike expectations into 2026. Deflation fuels speculation about negative SNB rates. BoE may sound more dovish after disappointing UK data.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.