NZD/USD consolidates at 0.5750 after rallying from 0.5670 lows
- The New Zealand dollar rallies from 0.5670 to consolidate at the 0.5750 area.
- Risk appetite and a weak US dollar are underpinning kiwi's rally.
- NZD/USD is expected to be capped at 0.5800 – UOB.
The New Zealand dollar appreciated sharply on Tuesday, after bouncing from session lows at 0.5670, to retrace Monday’s reversal and consolidate around 0.5750.
The USD tumbles amid Fed easing hopes
The US dollar depreciated across the board on Tuesday, weighed by lower US Treasury bonds, as a set of downbeat US indicators have spurred concerns about the negative impact of the Federal Reserve's sharp tightening path.
A larger-than-expected contraction in US housing prices and the second consecutive decline in consumer confidence seen Tuesday, plus the disappointing PMI data released on Monday are increasing pressure on the Fed to start contemplating lower hikes over the coming months.
Furthermore, the UK's new Prime Minister, Rishi Sunak’s first speech, committing to restore market confidence, and the re-appointment of Jeremy Hurt as Chancellor of the Exchequer have been welcomed by the investors. The sentiment-linked New Zealand dollar has appreciated nearly 1.20% on the day with the safe-haven US dollar losing ground.
NZD/USD: seen capped below 0.5800 – UOB
On the longer run, FX analysts at UOB expect the pair to remain in the current range, with the upside capped below 0.5800: “The price actions appear to be part of a consolidation phase and we expect NZD to trade between 0.5590 and 0.5800 for the time being. Looking ahead, NZD has to break clearly above 0.5810 before a sustained advance is likely.”
Technical levels to watch