The New Zealand Dollar has shown strong gains in the Asian session on Tuesday, driven by positive market sentiment that has weighed on the US Dollar. Investors are closely watching the People’s Bank of China (PBoC) rate decision, as well as upcoming Fedspeak scheduled for Tuesday.
The PBoC decided to maintain the one-year and five-year Loan Prime Rates unchanged at 3.35% and 3.85%, respectively. This decision has had an impact on the NZD/USD pair, pushing it higher. Additionally, New Zealand’s Trade Balance data for July revealed a slight improvement, with a reported deficit of NZD $-9.29B YoY, compared to the previous month’s deficit of $-9.5B.
Federal Reserve policymakers have been discussing the possibility of cutting US interest rates in September, with concerns surrounding the weakening labor market. Market expectations are now pricing in a 77% chance of a 25 basis points rate cut during the upcoming Fed meeting.
From a technical standpoint, the NZD/USD pair has shown bullish momentum on the daily chart, breaking above a key descending trendline. The pair is holding above the 100-day Exponential Moving Average (EMA), with the 14-day Relative Strength Index (RSI) indicating bullish sentiment.
A decisive break above the psychological level of 0.6100 could lead to a further upside towards 0.6154 and 0.6222. On the downside, the 100-day EMA at 0.6050 is a crucial support level, followed by 0.5974 and 0.5846.
The US Dollar has been weaker compared to other major currencies this week, as indicated by the percentage changes in the table below. The heat map shows the performance of major currencies against each other, with the Euro and Japanese Yen showing significant movements against the USD.
The New Zealand Dollar has shown strength in the Asian session, supported by positive market sentiment, PBoC rate decisions, and favorable trade balance data. With expectations of a Fed rate cut and technical analysis pointing to further upside potential for the NZD/USD pair, investors are closely monitoring developments in the currency markets.
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