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Kiwi Extends Gains as Softer U.S. Inflation Boosts Fed Cut Bets
Economic
Summary:
The New Zealand dollar extended gains on Wednesday, buoyed by robust risk appetite and a softer U.S. dollar after cooler U.S. inflation reinforced bets on a September Fed rate cut. NZD/USD is edging toward the 0.6000 mark, with traders eyeing stronger upside while key support at 0.5950 underpins the bullish trend.
Buy
CLOSEDNZDUSD
End Time
0.59804
Entry Price
0.60600
TP
0.59500
SL
0.58925 +0.00088 +0.15%
304
Points
Loss
0.59500
SL
0.59499
CLOSING
0.59804
Entry Price
0.60600
TP
The New Zealand dollar strengthened further on Wednesday, pushing past a key technical resistance level as global risk appetite improved and the U.S. dollar retreated on expectations of a Federal Reserve rate cut next month.
NZD/USD climbed above the 0.5970 barrier — a level that had capped gains on July 29 and August 8 — and is now approaching the psychologically significant 0.6000 handle. Market sentiment was lifted after Tuesday’s U.S. consumer price index (CPI) report showed inflation pressures remain contained, reinforcing the view that the Fed is poised to ease policy in September to cushion a softening labor market.
According to CME’s FedWatch Tool, traders are now pricing in a 95% probability of a 25-basis-point cut at the next policy meeting, up from 85% before the inflation data and just 50% a month ago. The sharp repricing underscores how quickly the market’s focus has shifted from whether the Fed will cut to how aggressive it might be later in the year.
The July CPI print showed annual headline inflation holding steady at 2.7%, defying economists’ expectations for a slight uptick to 2.8%. Core inflation — which strips out volatile food and energy costs — rose to 3.1%, marginally above the 3.0% consensus and June’s 2.9%. The slight overshoot in core prices did little to dent rate-cut optimism, as the broader inflation trend remains consistent with the Fed’s gradual disinflation narrative.
Attention today is limited to appearances by Chicago Fed President Austan Goolsbee and Atlanta Fed President Raphael Bostic. Both have recently signaled a preference for a cautious approach to policy tightening, suggesting their remarks are unlikely to give the greenback much support.
Beyond the Fed story, the New Zealand dollar also gained from broader risk-on sentiment after Washington and Beijing agreed to extend their trade truce for another 90 days. The decision alleviates some of the uncertainty surrounding global trade flows and bolsters currencies closely tied to Chinese economic fortunes. As a key exporter to China, New Zealand often sees its currency move in tandem with market perceptions of China’s economic outlook.
For now, the absence of negative domestic news has been enough to keep NZD bulls in control.
Technical Analysis
From a technical perspective, NZD/USD’s recent breakout above 0.5970 reinforces the short-term bullish corrective trend. The pair continues to trade above its 50-period exponential moving average (EMA50), with the supportive trendline intact and the relative strength index (RSI) flashing constructive momentum signals.
Key support is now pegged at 0.5950. As long as this level holds, the bullish structure remains valid, and buyers are likely to target the 0.6040–0.6060 zone — a strong resistance band and potential profit-taking area. A clean break of that zone could open the way toward a more sustained rally.
On the downside, a decisive drop below 0.5950 would undermine the bullish momentum, likely triggering a pullback toward the broader demand zone and reasserting seller control.
TRADE RECOMMENDATION
BUY NZDUSD
ENTRY PRICE: 0.5980
STOP LOSS: 0.5950
TAKE PROFIT: 0.6060
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