NZD/USD moves back and forth after RBNZ interest rate decision, hovers around 0.6060

NZD/USD has experienced fluctuations after the interest rate decision by the Reserve Bank of New Zealand (RBNZ). As expected, the central bank has maintained its Official Cash Rate (OCR) at 5.5% for the sixth consecutive meeting. The pair maintains position around 0.6060 during the Asian trading hours on Wednesday.

Policymakers emphasized the importance of keeping rates restrictive to curb inflation. Additionally, some economists perceived this decision as dovish, considering New Zealand's economy has entered a recession and consumer confidence has sharply declined. Markets are pricing in the possibility of the RBNZ's first rate cut in August.

US Dollar Index (DXY) attempts to hold its ground ahead of the release of the US Consumer Price Index (CPI) data and the FOMC Minutes scheduled to be released later in the North American session.

However, the US Dollar (USD) faced struggles due to lower US Treasury yields. At the time of writing, DXY consolidates around 104.10, with 2-year and 10-year yields on US Treasury bonds standing at 4.74% and 4.35%, respectively.

The US headline Consumer Price Index is anticipated to accelerate in March, while the core measure is expected to moderate. The US Dollar is in a state of anticipation, awaiting potential policy shifts influenced by incoming data. Strong labor market figures from last week may prompt a more hawkish stance from the Federal Reserve if inflation surpasses expectations.

According to the CME FedWatch Tool, the probability of a 25-basis point rate cut by the Fed in June has slightly risen to 53.5%. However, the likelihood of a rate cut in July has decreased to 49.9%.