NZD/USD Weakens Amid Fed’s Hawkish Shift

NZD/USD weakens as the US Dollar strengthens due to Federal Reserve (Fed) officials emphasizing a commitment to the 2% inflation target. Fed Governor Christopher Waller highlighted that policymakers view inflation as “taking off,” altering their approach to interest rate decisions. This stance continues to bolster the USD despite broader market trends.

The Fed official clarified that rates will not remain artificially low to support US government deficits. While Waller acknowledged the possibility of a rate target range, he warned that altering the 2% target now would undermine credibility. This rhetoric reinforces market confidence in the Fed’s inflation-focused policy.

Recent US economic data supported the Dollar’s resilience. The ISM Services PMI held steady at 54.0 in June, while the Employment Index rose sharply to 51.2. However, slowing New Orders and declining Prices Paid to 67.7 indicated cooling demand and cost pressures, though both remain elevated compared to pre-pandemic levels.

Short-term Technical Outlook:

Currently trading at 0.5705, NZD/USD shows mild bullish momentum as it stays above the 20-period SMA (0.5693) but faces resistance from the 100-period SMA at 0.5717. The Relative Strength Index (RSI) at 58 suggests balanced buying pressure without overextension.

After overnight declines, the Dollar rebounded during Monday’s session, though the pair remains subdued overall. Key resistance levels include 0.5717, 0.5907, 0.5930, and 0.5965. Support lies near 0.5702, anchored by converging indicators like the 20-period SMA and horizontal levels around 0.5693, with a floor at 0.5684.

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