NZD/USD prolongs its weekly uptrend for the third straight day amid a weaker USD.
Fed rate cut bets and the Israel-Iran ceasefire continue to undermine the Greenback.
Bets more RBNZ rate cuts and trade uncertainties warrant caution for the NZD bulls.
The NZD/USD pair attracts fresh buyers near the 0.6000 psychological mark during the Asian session on Wednesday and climbs back closer to the weekly top touched the previous day. Spot prices currently trade near the 0.6030-0.6035 area and look to prolong a three-day-old recovery momentum from a one-month low set at the start of this week amid a weaker US Dollar (USD).
The USD Index (DXY), which tracks the Greenback against a basket of currencies, languishes near a one-week low touched on Tuesday amid the growing acceptance that the Federal Reserve (Fed) will lower borrowing costs further this year. The USD bulls seem rather unimpressed by Fed Chair Jerome Powell's relatively hawkish testimony on Tuesday, reaffirming the wait-and-see rate policy amid expectations that US President Donald Trump's trade tariffs will boost inflation.
Meanwhile, the optimism over the Israel-Iran ceasefire, which came into effect on Tuesday, remains supportive of the upbeat market mood. This turns out to be another factor undermining the Greenback's safe-haven status and benefiting the risk-sensitive Kiwi. The NZD/USD pair draws additional support from the better-than-expected domestic data, showing that New Zealand posted a monthly trade surplus of NZ$1.235 billion in May and the annual deficit stood at NZ$3.79 billion.
However, the growing acceptance that the Reserve Bank of New Zealand (RBNZ) will cut rates further on the back of lower inflation and economic headwinds stemming from US tariffs might hold back the NZD bulls from placing aggressive bets. Even from a technical perspective, the recent repeated failures near the 0.6065-0.6070 supply zone make it prudent to wait for a sustained move beyond the said barrier before positioning for any further appreciating move.
* The content presented above, whether from a third party or not, is considered as general advice only. This article should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments.
