The NZD/USD pair is struggling to capitalize on its small gains from the previous two days and is under selling pressure on Wednesday. The pair has maintained its offered tone throughout the early European session and is presently trading at the daily low, around 0.6060, down around 0.20% for the day.
Weaker-than-expected The earlier-than-expected publication of Chinese macroeconomic data this Wednesday raises more concerns about a global economic downturn and dampens market confidence. The US Dollar (USD), a safe-haven currency, receives some support from a generally worse tone in the equities markets, which puts some downward pressure on the NZD/USD pair. In May, China’s trade surplus hit a 13-month low, driven mostly, by an unexpected 7.5% decline in exports. According to the report, despite the global economic downturn, there hasn’t been much demand for Chinese goods on the international market. The second-largest economy in the world is thus faced with new challenges, and demand for antipodean currencies, such as the Kiwi, is reduced.
The Reserve Bank of New Zealand’s (RBNZ) unambiguous indication that it was finished with its most aggressive hiking cycle since 1999 further devalues the New Zealand Dollar (NZD). However, the ambiguity surrounding the Federal Reserve’s (Fed) upcoming policy decision may discourage USD bulls from making risky bets and assist in containing losses for the NZD/USD pair. The prospect of a 25 basis points increase at the June FOMC gathering remains promising, thanks to the latest data on inflation and the labor market. However, dovish comments made by several Fed members this week increased market expectations of a soon-to-come pause in the cycle of policy tightening by the US central bank. The probability that the Fed will maintain current interest rates next week is higher according to market pricing at the moment.
The expectations cause US Treasury bond rates to continue to decrease, which should continue to weigh on the US dollar and provide some support for the NZD/USD pair. The round-figure price level of 0.6100 has experienced repeated failures, making it a favorable situation for bearish traders. However, given the aforementioned fundamental background, it is recommended to hold off on positioning for any additional intraday depreciating move in the absence of pertinent market-moving economic reports from the US until there is substantial follow-through selling.
NZD/USD Short (Sell)
Enter At: 0.60295
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