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NZD/USD Exchange Rate Falls from Nearly 5-Month High
The NZD/USD exchange rate has dropped from its highest level in nearly five months. On Wednesday, following the release of US inflation data, the NZD/USD rate exceeded 0.6220 for the first time since 15 January 2024.
However, today the rate has fallen approximately 1.3% from Friday’s peak, suggesting that the market's reaction to the US inflation news was overly emotional.
According to Reuters:
→ Fed Chair Jerome Powell indicated a readiness to keep rates steady until clearer economic signals suggest a need for cuts.
→ Traders have reduced the likelihood of a Fed rate cut at the September meeting.
Meanwhile, the Reserve Bank of New Zealand does not plan to cut rates at all in 2024. According to Trading Economics, any rate cuts are unlikely before mid-2025.
Thus, the policies of the two central banks are balanced, and the current drop from nearly a 5-month high may be a return to a more balanced valuation after an emotional surge into overbought territory.
The RSI indicator supports this view.
TO VIEW THE FULL ANALYSIS, VISIT FXOPEN BLOG
Disclaimer: This article represents the opinion of the Companies operating under the FXOpen brand only (excluding FXOpen EU). It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
The NZD/USD exchange rate has dropped from its highest level in nearly five months. On Wednesday, following the release of US inflation data, the NZD/USD rate exceeded 0.6220 for the first time since 15 January 2024.
However, today the rate has fallen approximately 1.3% from Friday’s peak, suggesting that the market's reaction to the US inflation news was overly emotional.
According to Reuters:
→ Fed Chair Jerome Powell indicated a readiness to keep rates steady until clearer economic signals suggest a need for cuts.
→ Traders have reduced the likelihood of a Fed rate cut at the September meeting.
Meanwhile, the Reserve Bank of New Zealand does not plan to cut rates at all in 2024. According to Trading Economics, any rate cuts are unlikely before mid-2025.
Thus, the policies of the two central banks are balanced, and the current drop from nearly a 5-month high may be a return to a more balanced valuation after an emotional surge into overbought territory.
The RSI indicator supports this view.
TO VIEW THE FULL ANALYSIS, VISIT FXOPEN BLOG
Disclaimer: This article represents the opinion of the Companies operating under the FXOpen brand only (excluding FXOpen EU). It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.