It appears that the NZD/USD exchange rate remains still below the 0.6200 bar. Investors are approaching the coming U.S. Consumer Price Index (CPI) data release tentatively, keeping the pair well around 0.6172.
The inconsistency of signals from the U.S. labor market data and dovish remarks by Fed Chairman Jerome Powell drive the reluctance to breach the 0.6200 mark. The chances are that there will be interest rate cuts by June. Meanwhile, trade tensions between the U.S. and China remain. The threat of escalation adds more uncertainty to the currency market.
Oil price fluctuations also play a role in the decision to stay just below 0.6200. And the inflating geopolitical concerns in the Middle East and Eastern Europe have led investors to safe-haven currencies. This move reduces the chance that the NZD/USD pair will exceed the 0.6200 barrier.
No one can ignore the impact of the ongoing COVID-19 pandemic on worldwide economies and currency exchange rates. The pace of the vaccine rollout and lingering insecurities continue to bend market forecast trends.
Now, more than ever, investors must stay adaptable and resilient. They must also keep an eye on U.S. non-farm payrolls data and central bank announcements. And of course, any rise in China’s CPI inflation data empowers the New Zealand dollar against the USD.
While experts forecast that if U.S. February CPI data matches or surpasses projected figures, this possibly could capitalize the U.S. dollar, we haven’t seen it yet.
Furthermore, both the U.S. Federal Reserve and the Reserve Bank of New Zealand likely will impact the currency exchange rate in the upcoming week with monetary policies. The Reserve Bank of New Zealand plans to adjust policies as the economic indicators change.
With the additional uncertainties from geopolitical tensions and commodity price variations, a possibly volatile NZD/USD exchange exists. Given all these elements, the forex market promises to be pretty captivating for traders and investors.
Powell hinted that a policy adjustment might come from the U.S. central bank. This shift comes as a result of the possible steady decline of the inflation rate to its 2% goal. This shift could force the USD down and lift the NZD/USD pair. Still, many factors influence currency exchange rates, not just the U.S. Central Bank policies. So, investors are advised to stay tuned to the latest developments.
Finally, while we have a hint of hope for a lift for the NZD/USD pair, this is subject to change as we continue to navigate through tech tensions and commodity price shifts.
