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Cooling NZ inflation expectations weigh on NZD/USD

NZD/USD slid 0.45% to about 0.5830 as revised RBNZ two-year inflation expectations fell to 2.34% from 2.53% last quarter.

Reported · Written up by our desk · Major Pairs

The New Zealand dollar weakened versus the US dollar, trading about 0.45% lower near 0.5830 during European trading, as cooling New Zealand inflation expectations reduced expectations for further Reserve Bank of New Zealand, or RBNZ, rate hikes.

FXStreet pointed to the RBNZ’s downwardly revised two-year inflation expectations for the third quarter, which came in at 2.34% year-on-year, down from 2.53% in the prior quarter. That shift, in turn, raised doubts about whether the RBNZ would deliver another policy rate increase at its September meeting.

The US dollar held on to gains from the prior session, with FXStreet citing ongoing Middle East tensions, while noting that US consumer price index data cooled as expected in July. On the technical side, the pair extended its correction toward a trend line near 0.5827 after slipping below the 20-day exponential moving average at 0.5842.

FXStreet also laid out key levels to watch, citing resistance around 0.5870 and the August 7 high at 0.5907, while support was pegged near 0.5827, where a break could open the door to a deeper pullback toward 0.5800 and then the July 29 low at 0.5761.

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