URGENT UPDATE: The NZDUSD is surging following the announcement of a preliminary US-China trade deal over the weekend, putting significant pressure on the US Dollar. This comes on the heels of a weaker than expected US CPI report, leading to a notable shift in market sentiment.
The dollar remains on the defensive as risk appetite grows among investors. With the Federal Reserve scheduled to announce its policy decision tomorrow, expectations are high for a 25 basis point cut and an end to quantitative tightening. The lack of key US economic data further complicates the dollar’s position, making a rally seem unlikely in the short term.
The Reserve Bank of New Zealand (RBNZ) recently cut the Official Cash Rate to 2.5%, signaling a dovish stance as they navigate economic uncertainties. This decision aligns with a 91% probability of another rate cut expected in November, as inflation data for Q3 came in line with projections, leaving market pricing unchanged.
On the technical front, the NZDUSD has breached the critical resistance level at 0.5780, with buyers flocking in to capitalize on the upward momentum. Analysts predict a potential rally toward the next resistance level at 0.5850 if buying pressure continues. Conversely, sellers are poised to re-enter the market should the price fall back below the 0.5780 support level.
Market observers are closely watching the evolving dynamics between bullish and bearish influences. The bullish momentum is highlighted on the four-hour chart with a defined upward trendline. Any pullback towards this trendline may present further buying opportunities, while a break lower could intensify bearish sentiment.
As the FOMC policy decision approaches, volatility is anticipated in the forex market. Additionally, a meeting between Donald Trump and Xi Jinping on Thursday could further impact market sentiment and currency valuations.
The implications of these developments are crucial for traders and investors alike, as the shifting landscape in US-China relations and domestic monetary policy decisions will likely dictate currency movements in the days ahead. Stay tuned for real-time updates as this situation unfolds.
