Nzdusd Trades Higher On Improved Risk Appetite

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Nzdusd Trades Higher On Improved Risk Appetite

NZD/USD Trades Near 0.600 On Improved Risk Appetite

The NZD continues its advance against the USD mainly due to improved risk sentiment. This change in the market mood has caused the greenback as well as the US bond yields to fall. For now, the NZD/USD exchange rate is near the 0.600 level with a gain of 0.76%.

In other words, the greenback lost 0.76% against the New Zealand Dollar, which is an indication that the USD is now on the back foot.

For the most part, Wall Street investors are now more willing to invest in riskier assets such as the NZD instead of the USD. At the same time, the recent PCE reading of 3.9% suggests that inflation is going down. The previous reading was 4%, with the headline inflation coming at 3.5%.

US Interest Rates Remain High

This recent inflation data suggests that the Fed will have more control over how long it wants to keep the interest rates in the range of 5.25% to %5.50. Most of the experts agree that the Fed can afford to remain hawkish, but there are some who believe that the risks may arise from a monetary policy that's too tight.

Furthermore, the UoM data shows that consumer sentiment has actually deteriorated with an uptick in inflation from a reading of 3.1% to 3.2%. The US citizens actually see the inflation rising to 2.8% from the 2.7% level (based on the 5-year forecast).

The technical outlook of the NZD/USD suggests that downward pressure is still pressure despite the recent rally of the NZD. The pair trades above the support of 0.600, but that's still not enough to sustain the bullish momentum.

The important levels to watch in the NZD/USD are the 0.6050 and then the resistance near 0.6100. Both of these levels are important to confirm whether the NZD/USD will stay above 0.600 or fall back once again. Similarly, a break of the 0.600 means the 0.580 and the 0.550 levels will become relevant once again.

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