Kiwi Surges as US-China Deal Pressures USD – Urgent Update

UPDATE: The New Zealand Dollar (NZD) is surging against the US Dollar (USD) following a pivotal US-China trade deal announced over the weekend. This development, coupled with a softer-than-expected US Consumer Price Index (CPI) report, has created a risk-on sentiment that is weighing heavily on the greenback.

As of now, the USD remains under pressure, with markets responding cautiously to the recent trade negotiations between the United States and China. The deal has bolstered investor confidence, leading to a significant drop in the dollar’s strength. The anticipated Federal Reserve meeting tomorrow is expected to see an interest rate cut of 25 basis points, with analysts viewing this as a non-event due to a lack of new economic data. The Fed is likely to maintain a dovish stance, as highlighted by the absence of the Summary of Economic Projections (SEP).

In New Zealand, the Reserve Bank of New Zealand (RBNZ) recently cut rates by 50 basis points, reducing the Official Cash Rate (OCR) to 2.5%. This places the OCR at the lower end of the RBNZ’s neutral range, as officials express a cautious outlook on the economy. Last week’s Q3 inflation report met expectations, with no significant changes in market pricing—currently showing a 91% probability of another rate cut in November.

Technically, the NZD/USD pair has broken through the resistance zone at 0.5780, with bullish traders eager to push towards the next resistance level at 0.5850. The market sentiment is shifting, as buyers are positioning themselves below the now-supportive level of 0.5780, while sellers are poised to step back in if prices fall below this threshold.

On the 4-hour chart, an upward trendline indicates ongoing bullish momentum. Any pullbacks to this trendline may attract buyers, seeking to capitalize on the bullish trend. Conversely, sellers will be watching for a breakdown to increase their bearish positions.

The market’s focus now shifts to the upcoming FOMC policy decision scheduled for tomorrow, where further insights into the Fed’s direction may influence currency movements. Additionally, traders are keenly anticipating the Trump-Xi meeting later this week, which may further impact US-China relations and market dynamics.

Stay tuned for live updates as the situation develops. The interplay of these economic factors is crucial for traders and investors alike, as the implications of these decisions unfold in real-time.