New Zealand Dollar Talking Points
NZD/USD[1] approaches the monthly high (0.7305) as a growing number of Federal Reserve officials[2] warn of a transitory rise in inflation, and the Federal Open Market Committee[3] (FOMC) Minutes may keep the exchange rate afloat as the central bank appears to be in no rush to scale back its emergency measures.
NZD/USD Rate Holds Above 50-SMA to Target March High
NZD[4]/USD[5] reveres ahead of the monthly low (0.7115) to hold above the 50-Day SMA (0.7139), and the exchange rate may continue to negate the head-and-shoulders formation from earlier this year as the Fed stays on track to “increase our holdings of Treasury securities by at least $80 billion per month and of agency mortgage-backed securities by at least $40 billion per month.”
NZD/USD looks poised to retrace the decline following the update to the US Consumer Price Index (CPI)[6] as Fed officials retain a dovish forward guidance for monetary policy, and the FOMC Minutes may generate a bearish reaction in the US Dollar[7] as the central bank shows little intentions of switching gears ahead of the second half of the year.
It seems as though the FOMC is in no rush to scale back its emergency measures as the committee warns that it will “take some time for substantial further progress to be achieved,” and it remains to be seen if Chairman Jerome Powell and Co. will change its tone at its next interest rate decision on June 16 as the central bank is slate to update the Summary of Economic Projections (SEP).
Until then, NZD/USD may continue to trade within in the March range as it negates the head-and-shoulders formation from earlier this year,
