NZD/USD Today - The NZD/USD currency pair has attracted some buying interest for three consecutive days on Tuesday and remains stable above the mid-0.61 level during the Asian session. However, the spot price remains within a broader trading range from the previous day, prompting caution before taking a position for an extension of the recent recovery from the three-week low reached last Thursday.

The US Dollar (USD) is facing difficulty in attracting significant interest due to uncertainty regarding the future path of interest rate hikes by the Federal Reserve. This has become a key factor supporting the NZD/USD pair.

It is important to note that the US central bank signaled in June that interest rates could rise by 50 basis points by the end of this year, a view reinforced by Federal Reserve Chairman Jerome Powell last week.

However, recently released US economic data has sparked speculation that the central bank will reduce its hawkish stance sooner than expected, which has led USD-supporting market participants to remain cautious in taking risks.

In fact, the US Bureau of Economic Analysis reported on Friday that the annual Personal Consumption Expenditures (PCE) Index slowed to 3.8% in May from 4.3% previously, and the core measure declined to 4.6% from 4.7% in April.

Additionally, the ISM Manufacturing PMI remained in contraction territory for the eighth consecutive month in June, reaching its lowest level since May 2020. Nevertheless, the market still anticipates a 25 basis point rate hike at the July FOMC meeting.

This significant divergence between the dovish Reserve Bank of New Zealand (RBNZ) policy and the more aggressive policy indicates the most aggressive rate-hiking cycle since 1999.

Given the fundamental backdrop mentioned above, it would be prudent to wait for a follow-up from strong sell-offs before considering taking a new bullish position on the NZD/USD pair ahead of important data releases this week.

The minutes of the June FOMC meeting are scheduled for Wednesday and will be the focus of attention for clues on future Fed rate hikes. Additionally, on Friday, the US monthly jobs data known as Nonfarm Payrolls (NFP) will be released, which will affect USD currency movements.

On the other hand, traders may prefer to wait and observe the trading situation, which is expected to be quieter during the US Independence Day holiday.

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Warning!

This analysis is based on both fundamental and technical perspectives from trusted sources, and is not intended as advice or a suggestion. Always remember that this content aims to enrich the reader's information. Always conduct independent research first regarding other forex information to use as a reference in your trading.

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