NZD/USD Continues Upward Trend Amidst Mixed Economic Indicators

During the early European session on Thursday, the NZD/USD pair maintained its upward trajectory, hovering around 0.5930 for the second consecutive day. The decline in the US Dollar (USD) has bolstered support for the NZD/USD pair, driven in part by an improvement in overall risk sentiment.

A recent report revealed that New Zealand’s Consumer Price Index (CPI) has dropped to its lowest level in nearly three years, registering at 4% year-over-year in the first quarter. This development potentially provides the Reserve Bank of New Zealand (RBNZ) with greater flexibility to consider interest rate cuts. Despite acknowledging persistent inflation in specific sectors, the RBNZ opted to keep interest rates steady at 5.5% during its policy meeting last week.

Conversely, Federal Reserve Bank of Cleveland President Loretta Mester acknowledged on Wednesday that inflation has surpassed expectations. Mester emphasized the need for the Fed to seek further assurance before confirming the sustainability of 2% inflation, as reported by Reuters.

Furthermore, US Federal Reserve (Fed) Chair Jerome Powell’s comments on Tuesday indicated limited progress in inflation this year, suggesting a prolonged period before reaching the 2% target. This stance potentially reflects a hawkish sentiment surrounding the Fed’s upcoming policy decisions, which could lend support to the US Dollar and consequently restrain the NZD/USD pair’s upward momentum.

In terms of upcoming data releases, traders are eagerly awaiting the release of weekly Initial Jobless Claims and Existing Home Sales data from the United States (US) on Thursday. These reports have the potential to offer further insights into the state of the US economy, potentially influencing the direction of the Greenback in the near term.

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