Daily Price Outlook
The NZD/USD pair is currently trading at 0.6221, which represents a decline of 0.22% over the last 24 hours. The pair retreated as investors became worried ahead of publishing New Zealand's Gross Domestic Product (GDP) data and the US Retail Sales and Manufacturing statistics.
Fed Rate Hikes Speculations
Last week, Jerome Powell, president of the US Federal Reserve, said that the benchmark interest rate would increase earlier than anticipated. He said that interest rates would climb more quickly if there were strong economic statistics. However, given the current issues with the US banking system, traders anticipate a less hawkish central bank since they are concerned that more banks may collapse.
After the US Government, Federal Reserve, and Federal Deposit Insurance Corporation (FDIC) actively insured a rescue for all bank depositors, foreign currencies found relief due to declining rate expectations.
However, investors began to worry about Fed rate increases when the US CPI report revealed that inflation is still a problem.
After the CPI report, Reuters reported that a government analysis revealed that American inflation remained high in February. Therefore, the Federal Reserve may increase its interest rates by 0.25 points the next week and one more in May.
After hearing that the Fed may hike interest rates next week, the US Dollar Index (DXY) received bids to test the 103.76 intraday high. The yield on US Treasury bonds with a 10-year maturity rose to 3.678%. It causes the NZD/USD currency pair to decline.
Traders are waiting for Retail Sales and the Producer Price Index (PPI) later today for further information about the US economy and inflation.
New Zealand Upcoming GDP report
Early this morning, New Zealand's current account results impacted the Kiwi Dollar. The current account deficit decreased from NZ$11.40 billion to NZ$9.46 billion in the fourth quarter.
Traders are now anticipating Statistics New Zealand's GDP report. Estimates indicate that the New Zealand GDP has shrunk by 0.2% after growing by 2.0% in the third quarter.
A slowing of the growth rate shows that household demand is becoming more limited, easing the pressure on Reserve Bank of New Zealand (RBNZ) policymakers working to slow down inflationary pressures. The RBNZ may suspend the cycle of rate hikes if there is a large downward deviation in the GDP. It will be unfavorable to the NZD/USD pair.
NZD/USD Intraday Technical Levels
Pivot Point: 0.6228
NZD/USD – Technical Outlook
The NZDUSD pair has resumed its negative trend and is approaching the EMA50. It is expected to decline further towards our next main target at 0.6140. Breaking this level may extend the bearish wave to reach 0.6020.
As such, we maintain a bearish outlook for the upcoming trading sessions, unless the pair breaches 0.6290 and holds above it. The expected trading range for today is between support at 0.6170 and resistance at 0.6280.