The US Dollar (USD) strengthened on Tuesday due to rising US Treasury yields and speculation that the Federal Reserve (Fed) may delay cuts. Geopolitical tensions in the Middle East also boosted demand for the Greenback. Fed Chair Powell noted a lack of progress in inflation, while soft housing market data from the US failed to impact the currency pair.
The NZD/USD pair dropped to 0.5879, a 0.46% loss, influenced by market expectations and the Fed’s decision to hold off on rate cuts. Rising Treasury yields added downward pressure on the pair. March data showed a decline in Building Permits and Housing Starts, but industrial production met expectations.
Market sentiment shifted towards a more aggressive Fed following strong US data, with expectations of a rate cut in September and a 70% chance of a second cut in December. Powell’s comments on inflation and the need for time for monetary policy adjustments also contributed to the USD’s strength against the NZD.
Technical analysis of the NZD/USD pair indicates negative momentum, with the RSI and MACD suggesting a bearish market. The pair is trading below key moving averages, indicating a negative trend unless buyers push the pair above these levels. Bears currently dominate the market.
Overall, the USD’s strength against the NZD is driven by market expectations and Fed actions, with rising Treasury yields also benefiting the Greenback over the Kiwi Dollar.