NZD Recovers from Two-Week Low as Fed Hike Bets Fading
The New Zealand Dollar (NZD) has recovered from its two-week low, thanks in part to fading expectations of a US Federal Reserve rate hike. The recent US Consumer Price Index (CPI) and Producer Price Index (PPI) reports showed signs of cooling inflation, which has led traders to pare their bets on an immediate rate increase by the Fed.
This development has put pressure on US Dollar bulls, making it easier for the NZD/USD pair to appreciate. However, the ongoing US-Iran standoff continues to support the safe-haven dollar, limiting further gains in the Kiwi.
A survey from the Reserve Bank of New Zealand (RBNZ) showed inflation expectations easing in the third quarter, slipping to 2.34% from 2.53%. This gives the central bank less reason to tighten further, which should contribute to capping the upside for the NZD/USD pair.
The NZD/USD pair has defended the 100-day Simple Moving Average (SMA) at 0.5827, keeping the near-term tone mildly bullish. A daily close back below this level would hint at a loss of bullish momentum and expose the recent lows around the mid-0.5700s.