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NZD/USD hangs near two-week low; seems vulnerable below 0.5850/200-day SMA amid firmer USD

  • NZD/USD struggles to capitalize on a modest intraday uptick to the 200-day SMA support breakpoint.
  • The Fed’s hawkish tilt and the US-Iran stalemate continue to underpin the USD, capping spot prices.
  • Traders now look to the Advance US Q1 GDP report and the US PCE Price Index for a fresh impetus.

The NZD/USD pair attracts fresh sellers following a modest Asian session move up to the 0.5845 area on Thursday and slides back closer to a two-and-a-half week low, touched the previous day. Spot prices currently trade around the 0.5825 region, nearly unchanged for the day, and seem vulnerable to this week's retracement slide from the 0.5920-0.5925 horizontal barrier amid a bullish US Dollar (USD).

The USD Index (DXY), which tracks the Greenback against a basket of currencies, gains positive traction for the third consecutive day and touches a fresh high since April 13 amid a combination of supporting factors. The global risk sentiment remains fragile in the wake of stalled US-Iran peace talks. Furthermore, the US Federal Reserve’s (Fed) relatively hawkish tilt on Wednesday lends additional support to the safe-haven USD, which, in turn, is seen weighing on the NZD/USD pair.

US President Donald Trump rejected Iran's new proposal to end the two-month conflict and reiterated that there will be no peace deal with the Islamic Republic unless they agree to give up the nuclear program. Trump further said that the naval blockade of Iranian ports will continue. The continued disruptions of energy supplies through the Strait of Hormuz remain supportive of elevated Crude Oil prices, fueling inflationary concerns and reaffirming hawkish Fed expectations.

As was widely expected, the US central bank held its key policy rate unchanged at 3.50%-3.75%. Notably, the decision saw the highest number of dissents since 1992, with three policymakers voting against the accommodative tone in the policy statement. Traders sharply reduced bets on any further Fed policy easing and are now pricing in over a 10% chance of a rate increase by year-end. This favors the USD bulls and validates the negative outlook for the NZD/USD pair.

The aforementioned factors offset expectations that the Reserve Bank of New Zealand (RBNZ) would maintain a cautious stance or consider tightening to bring inflation back to the 2% midpoint. This, along with an intraday failure near a technically significant 200-day Simple Moving Average (SMA) support-turned-resistance, suggests that the path of least resistance for the NZD/USD pair is to the downside. Traders now look to important US macro data for a fresh impetus.

US Dollar Price Today

The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Euro.

USDEURGBPJPYCADAUDNZDCHF
USD0.15%0.09%0.06%0.00%-0.01%0.00%0.05%
EUR-0.15%-0.02%-0.07%-0.14%-0.15%-0.12%-0.07%
GBP-0.09%0.02%-0.04%-0.12%-0.11%-0.09%-0.05%
JPY-0.06%0.07%0.04%-0.07%-0.08%-0.11%-0.04%
CAD-0.01%0.14%0.12%0.07%-0.03%-0.02%0.05%
AUD0.01%0.15%0.11%0.08%0.03%0.03%0.09%
NZD-0.00%0.12%0.09%0.11%0.02%-0.03%0.05%
CHF-0.05%0.07%0.05%0.04%-0.05%-0.09%-0.05%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).

Author

Haresh Menghani

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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